Gold (GC) versus Gold Volatiliy (GZV) Monthly Analysis

2023년 5월 28일

I took the gold volatility index GVZ and created a simple regression trend from 2008 to present on a monthly chart. I then took the points at which the GVZ spiked above two standard deviations of the trend. These points are the vertical lines on the chart.

The vertical lines, or points which had a large spike (all above a reading of 30) on GVZ in most cases indicated a marked trend change in gold.

Gold has a cup & handle chart pattern, and has been trending mostly sideways on "the handle". This is a bullish setup.

Presently, the GZV reading is 21.05, and Gold (so far) has shown some support around 1940-1950. However, should GZV "spike" above 30, then I would consider the prospect of a major move (could be either direction, as patterns are not sacred). However, in 12/21 and 3/22, there was no significant trend change (i.e., gold stays inside the handle), and I consider that a positive. The breakdown of the handle is around 1618 or prior pivot low.

Fortunately, if there is a major spike above 30, there still should be ample time to adjust. Should GZV spike and Gold breaks out above, then you will witness a cup & handle breakout.

This is a long term perspective, so if you can't stand the volatility, find another trade.