Gold’s back....Phil Mining Index leads the Phisix?

The recent emergence of a global “risk aversion” led to convulsive liquidations in a majority of asset classes with commodities and emerging bourses suffering the most after delivering the best returns over the past 3 years.

However, following the dramatic selling scare over the past month, it appears that gold prices, a leading representative of the commodities class, appears to have settled down or may have manifested signs of a bottom.

As you can see above (courtesy of stockcharts.com), Gold bounced off its 200-day moving averages following its recent low at $542, while technical indicators MACD seems to be in the process of segueing into the bullish "golden cross" and Relative Strength Index appears to indicate a forward momentum.

The Phisix including its Mining Index component like its peers abroad endured the recent spate of shellacking. However, activities in the gold market appear to have driven the mining index higher despite the lackluster foreign driven selling performance of the Phisix (blue line chart below).

As you can see from the chart above, the Philippine Mining Index lagged the gold market for 2 days only (vertical red arrow) while recent recovery (red trend line arrow) shadows that of the rallying gold.

And with technical factors pointing towards a recovery in the gold market, the mining index is likely to lead the domestic market once again. Fundamental-wise, a rallying gold could foreshadow the Fed taking a breather SOON. Time to ante up.