After 5 days of positive aspects, gold is on the verge of a breakout

These are heady times for the gold bulls. The previous metal is working on a five-day winning streak that’s likely to continue with a $32 gain today.

More importantly, it’s now just a handful of dollars from the $3500 record high on April 22. There is plenty of scope for an aggressive breakout on the chart as it’s been consolidating for five months in a classic wedge. I wouldn’t rule out a test of $4000.

On the fundamental side, Friday’s news about tariffs looms. A US court struck down Trump’s tariffs and the decision is inevitably headed to the Supreme Court. If the tariffs are eliminated, it would give the Fed ample ammunition to cut rates, even without Trump stacking the board.

There are also increasing signs that retail is piling in as the US dollar sags and political uncertainty mounts.

It’s something of a perfect storm and could kick off with a break of $3500.

As for how to play it, I tend to think there is still a catch-up trade in miners. GDXJ is the junior miner ETF and it’s rallied but there is extreme leverage to gold prices in this index, particularly if diesel prices stay low.