Thursday’s ETF Chart To Watch: State Street SPDR Gold Trust (GLD)

by on October 27, 2011 | ETFs Mentioned:

Investor optimism on Wall Street got a nice boost yesterday after European officials made the first steps towards devising a “rescue plan” for the debt stricken currency bloc. EU leaders in Brussels reached an agreement on a bank recapitalization plan and news that China might help finance the effort also cheered up investors. One the home front, the U.S. durable goods report showed mixed results; the figure declined by 0.8% since last month, but excluding transportation, durable goods orders in September were up 1.7%. Gold soared higher alongside equities, with futures prices for the precious yellow metal hitting a multi-week high of $1,728 an ounce.

Third quarter U.S. GDP is slated to come out later today and analysts are expecting for growth to come in at 2.8%, which is considerably higher that the previous reading of 1.3%. Investors will pay close attention to this major economic report as it offers insights regarding the health of U.S. economic recovery as well as the overall global economic outlook. The SPDR Gold Trust (GLD) is our ETF to watch for today since this fund may see considerable volatility depending on investors’ reactions to the latest GDP report and the significant volatility in gold prices in recent sessions [see our Commodity Guru ETFdb Portfolio].

Chart Analysis

Consider GLD’s chart below and notice how this ETF declined considerably since topping out at $185.85 a share on 9/6/2011 [see GLD Charts]. Take notice of how GLD came very close to hitting its 200-day moving average (yellow line) as it has in the past. If history repeats itself, we can expect for GLD to continue its slow and steady uptrend over the coming months, although the near-term outlook is a bit more uncertain [see Special Report: Gold ETFs In Focus].

Click to Enlarge

GLD has considerable support around the $160 level, and a close below this mark would put considerable downward pressure on the ETF, perhaps sending it back down to $150 a share [see GLD Technicals]. This ETF has been fairly range-bound over the past month, oscillating between $165 and $155 a share. However, it appears to have broken out to upside over the last two days.


GLD is quite attractive at current levels, seeing as how the fund is trading above its 200-day moving average coupled with considerable upside potential extending all the way up to the $180 level. In terms of resistance levels, GLD may fall victim to profit taking as it nears $170 a share, while $180 a share is certainly a viable resistance level over a longer time period [see Among Gold ETFs, Bigger Isn't Always Better]. A better-than-expected U.S. GDP report may put downward pressure on gold prices as investors re-allocate capital to equity markets. In terms of downside, GLD has major support between the $160 and $155 levels. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit taking techniques.

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Disclosure: No positions at time of writing.