The SPDR Gold Trust (ETF) (NYSE:GLD) is down 8.1 percent since Election Day, but some traders are taking the opportunity to buy the dip. Break Capital analyst Frank Longman sees reason to be bullish on gold from a technical analysis perspective.
We like a little zig to the markets zag from time to time and think that theres a critical mass of reasons for intermediate-term investors to consider some gold exposure into weakness, Longman explains.
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Longman says investors that felt gold envy earlier in 2016 when the precious metal was on fire shouldnt miss out on this opportunity. In addition to gold and gold ETFs reaching technical support levels, mid-year excess in the physical market is now gone and the rally in Treasury yields may have peaked for now. Finally, he notes a recent meaningful positive RSI divergence in golds chart. According to Longman, these conditions are all bullish for gold in the medium-term.
He expects gold will bounce somewhere in the $1134-$1187 range.
For the GLD ETF, he proposes a price target of $123 with a stop order below $107.
When it comes to the Market Vectors Gold Miners ETF (NYSE:GDX), Longman suggests a $27.40 target with a stop below $17.
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