According to SentimenTrader, the price of gold may finally be unleashed higher according to a major signal indicator.
A Golden Launch?
October 24 (King World News) – Here is a portion of a report SentimenTrader just put out a report on gold: Gold/S&P Ratio flips to favor gold.
Key points
- One iteration of the Gold/S&P 500 Ratio just tipped favorably for gold
- Is it time to load up on the yellow metal?
- To answer that question, the discussion below reviews the history of this indicator
The History of the Gold/S&P 500 Ratio
The Gold/S&P 500 Ratio (Gold/SPX Ratio) is derived by dividing the weekly closing price for gold by the weekly closing price for the S&P 500 Index. The chart below displays the Gold/S&P 500 Ratio since 1975. Comparing the weekly reading to the 200-week moving average creates a long-term trend-following indicator.
Interpretation is relatively simple:
- When the ratio is above the 200-week moving average, the indicator is considered favorable for gold
- When the ratio is below the 200-week moving average, the indicator is considered unfavorable for gold
Note that as of the close on 2023-10-20, the Gold/SPX Ratio had once again closed back above the 200-week moving average. As a result, this indicator is once again deemed favorable for gold bullion.
The chart below displays the Gold/SPX Ratio since 1975 and includes the 200-week moving average of weekly ratio readings.
The chart below zooms in on the 2000-present period.
The chart below zooms in on roughly the last eight years of history.
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