The GDX ETF stock is doing well as gold prices approach their all-time high and as investors slowly embrace a risk-on sentiment. The VanEck Gold Miners ETF jumped to a high of $35.21, the highest level since May 2022, meaning that it has jumped by over 60% from the lowest level in 2022.
Transition to gold continuing
The GDX ETF is a leading fund that tracks the biggest gold mining companies in the world. In most cases, the fund does well when gold prices are rising. Gold price was trading at $2,016 on Wednesday, a few points below its all-time high of $2,070.
There are chances that gold prices will continue rising in the coming months. As shown in the monthly chart below, gold has been forming a cup and handle pattern in the past few years. It has already cleared the cup section and the recent consolidation is part of this handle.
Therefore, by measuring the distance between the upper and lower side of the cup, we can estimate that gold prices will rise to $2,730 in the long term. This price is over 40% above the current level.
Gold price chart
The main catalyst for this price action is the fact that many countries are moving to the safety of gold as the situation in the US worsens. For one, there are still risks – albeit small – that the American government will default on its obligations in the next few years. With divisions in Washington, the two sides will likely fail to reach a debt ceiling agreement in the future.
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Meanwhile, there is a general distrust of the American government. As a result, central banks from countries like Russia, Iran, China, Turkey, and even Saudi Arabia will likely boost their gold holdings. The most recent data shows that central banks bought a net 31 tons of gold n January. This is after they bought the most gold on record in 2022.
Further, there are signs that investors are embracing a risk-off sentiment. As we wrote in this article on Tuesday, Bitcoin price jumped above $30,000 this week while the US dollar index is on the cusp of moving below $100. All these are positive catalysts for the GDX ETF.
GDX ETF stock price forecast
GDX chart by TradingView
The daily chart shows that the VanEck Gold ETF stock has been in a strong bullish trend in the past few weeks. As it rose, the fund managed to invalidate the double-top pattern at $33.28. The ETF has also formed a golden cross, which happens when the 200-day and 50-day moving averages crossover.
The fund has also jumped above the 61.8% Fibonacci Retracement level. Therefore, there is a possibility that the GDX stock will continue soaring as buyers target last year’s high of $41.60.
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