Friday’s ETF Chart To Watch: SPDR Gold Trust (GLD)

by on August 31, 2012 | ETFs Mentioned:

Equity markets remain plagued with low trading volumes and anticipation ahead of today’s speech at Jackson Hole has only added to the list of uncertainties keeping a lid on investors’ confidence. On the data front, the outlook remains mixed; weekly jobless claims came in unchanged from last week’s figure of 374,000 while personal income and consumer spending both met expectations, ultimately failing to ignite bullish fever on Wall Street [see also ETF Tools Every Investor Needs].

As Fed Chairman Bernanke makes an appearance later today, our radar will be focused on the State Street SPDR Gold Trust (GLD, A). Gold prices could be in for a volatile trading day depending on how investors react to the latest commentary from Bernanke, most of which are expecting will indicate that the Fed is holding off from more stimulus measures until deemed absolutely necessary [see also Billionaires Trust GLD, Why Can't You?].

Chart Analysis

GLD has been trading along a steadily, although slowly, rising support line since bottoming out in late May of this year; notice how this ETF has been creeping higher for the last three months while at the same time oscillating within the blue trading channel. It’s worth noting that GLD recently broke above the $160 level, seeing as how it previously tried, and failed, to summit this resistance level on several occasions. This ETF’s recent rally is also significant because it has managed to carry it above the 200-day moving average (yellow line), perhaps suggesting that GLD is on its way to resuming its longer-term uptrend [see also GLD-Free Gold Bug ETFdb Portfolio].

Click To Enlarge

Although its recent break above $160 is a bullish sign, conservative investors should consider holding off from jumping in long at current levels; notice how GLD is trading near the top-half of its channel, which may suggest that profit taking pressures could emerge in the coming days and offer a better entry point [see also ETF Technical Trading FAQ].

Outlook

If Bernanke’s comments at Jackson Hole spark a rally for equities, safe havens like gold could face major headwinds on the day; in terms of downside, GLD has minor support at $158 a share followed by the $154 level. On the other hand, a pessimistic reaction to the Chairman’s comments could bolster gold prices higher; in terms of upside, this ETF has resistance at $162.50 a share followed by the $165 level. 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.