The best indicator for Gold (IAU)
We backtested 20 indicators across daily, weekly and hourly charts on real Gold (IAU) history. Here's what actually worked — risk-adjusted, out-of-sample, with costs.
Donchian Midline
On the weekly chart, this is the strongest risk-adjusted edge we found for Gold (IAU) over ~21.4 years — trailing buy-and-hold by 3.3% CAGR.
The winner on each chart
Every indicator, ranked
Ranked by Sharpe (risk-adjusted return). Hypothetical, fees included.
| # | Indicator | TF | CAGR | Sharpe | Max DD | Win | Trades | vs B&H |
|---|---|---|---|---|---|---|---|---|
| 1 | Donchian Midline ✓ | Weekly | 7.7% | 0.62 | -39.7% | 45.8% | 59 | -3.3% |
| 2 | RSI Trend (>50) ✓ | Weekly | 7.8% | 0.61 | -32.8% | 43.6% | 55 | -3.2% |
| 3 | SMA 50/200 Cross ✓ | Daily | 8.3% | 0.61 | -35.7% | 50.0% | 14 | -2.9% |
| 4 | ADX / DMI ✓ | Weekly | 6.3% | 0.56 | -24.9% | 40.0% | 20 | -4.8% |
| 5 | EMA 50/200 Cross ✓ | Daily | 8.9% | 0.64 | -32.1% | 38.5% | 13 | -2.2% |
| 6 | MACD ✓ | Weekly | 6.3% | 0.55 | -32.6% | 51.1% | 45 | -4.8% |
| 7 | Rate of Change ✓ | Weekly | 6.7% | 0.55 | -34.8% | 56.9% | 65 | -4.3% |
| 8 | MACD ✓ | Daily | 6.4% | 0.54 | -22.4% | 44.9% | 214 | -4.7% |
| 9 | EMA-10 Trend ✓ | Weekly | 6.6% | 0.54 | -40.3% | 47.5% | 101 | -4.5% |
| 10 | Donchian Breakout ✓ | Weekly | 6.0% | 0.52 | -43.7% | 55.6% | 18 | -5.0% |
| 11 | EMA 20/50 Cross ✓ | Daily | 6.4% | 0.5 | -33.0% | 46.9% | 49 | -4.7% |
| 12 | Bollinger Breakout ✓ | Weekly | 4.7% | 0.46 | -36.1% | 45.8% | 24 | -6.3% |
| 13 | Stochastic ✓ | Daily | 4.4% | 0.45 | -24.9% | 67.5% | 120 | -6.8% |
| 14 | Donchian Midline ✓ | Daily | 4.8% | 0.42 | -35.4% | 36.0% | 292 | -6.4% |
✓ = held up out-of-sample. Hypothetical, costs included. See methodology.
For Gold (IAU), Donchian Midline on the weekly timeframe gave the best balance of return and risk in our test. It still trailed buy-and-hold on raw return — but remember: this is a hypothetical backtest of a standard rule, not a recommendation. Markets change. See the methodology and disclaimer.
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