Gold Price Recovery Forecasted By The Miners

London (Mar 5)  Summary •Gold miners, GLD, and the price have been beaten up, but the week ahead looks promising. •Trump's speech on Tuesday and the anticipated March Fed rate hike have weighed down on the gold price last week. These are now priced in, and a rally is coming. •The gold miners and stocks tend to be a leading indicator of the gold price. We should buy at this dip in price before it rallies next week.

If you were a long in the gold market this week, there were a lot of headwinds that looked very formidable for gold, the gold ETF(NYSEARCA:GLD), and the miners (GDX, GDXJ). Gold prices began a correction in the later half of this week after an overall 6.3% increase in the price of gold since the beginning of the year. The gloom and doom figures for the week are below:

What's interesting here is that the gold miners took a heavy beating, while the gold price and ETF managed a minor correction instead of a rout. So let's look at what happened last week, and try to see if we can glean some information about what the data says for the week ahead.

The Dollar, Market Behavior, and Gold

On Tuesday, we got Donald Trump's speech before a joint session of Congress, which the stock markets enjoyed mostly because he managed to avoid offending anyone. That meant less uncertainty about what his policies would be, and less volatility in the markets.

The day after the speech, on March 1, the Dow (^DJI) and markets in general rewarded investors with huge gains. Most of this optimism came from expectations for future tax cuts, which justified higher earnings and valuations for stocks.

Source: SeekimgAlpha