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

by on March 22, 2012 | ETFs Mentioned:

Stocks were mixed on Wednesday as euphoria levels cooled off after markets reacted to worse-than-expected housing market data. Investors fretted over the latest existing home sales report; the February figure came in at $4.59 million, which missed analyst estimates of $4.6 million, and also fell short of the previous reading of $4.63 million. Looking ahead, investors will gain more insights into the health of the housing recovery on Friday as the new home sales report hits the street [see also Five ETFs With Sky High Yields]. 

Despite the bull-run slowing down a bit this week on Wall Street, improving economic growth expectations in 2012 have put pressure on gold prices as investors tweak their portfolio to favorably position themselves as the recovery picks up [see Gold Hits Resistance, Time To Worry?]. The precious metal will come into focus later today following the release of the weekly jobless claims report. Our ETF to watch for the day is the ultra-popular State Street SPDR Gold Trust (GLD) which may see an increase in trading volumes as investors react to the latest employment data; analysts are expecting for jobless claims to come in at 353,000 versus the previous reading of 351,000. 

Chart Analysis

This ETF has struggled to resume its long-term uptrend thus far since peaking at $185.85 a share on 9/6/2011. Since then, GLD has attempted, and failed, twice to regain support above the $180 level; notice how this ETF encountered selling pressures near $175 a share back on 11/8/2011 and more recently on 2/28/2012. In both instances, GLD ultimately failed to summit the $180 level, trading lower in the weeks following [see also Seven Reasons To Hate Gold]. 

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While this ETF does appear to be building support around $160 a share, investors should be cautious seeing as how it traded down to the $150 level the last time it hit resistance starting on 11/8/2011. Another worrisome observation is the fact that GLD is now back below its 200-day moving average (yellow line), which could help to accelerate selling pressures if confidence in the metal continues to deteriorate over the coming days. 


If the latest jobless claims data comes in better-than-expected, confidence in the domestic recovery will likely improve and demand for safe haven assets, including gold, could falter. Likewise, GLD may trade lower if equity markets resume their bull-run; in terms of downside, the next level of major support for this ETF lies at $155 a share. On the other hand, a disappointing employment report could pave the way higher for gold prices. In terms of upside, GLD may encounter resistance as it struggles to settle above its 200-day moving average near the $165 level [see GLD-Free Gold Bug ETFdb Portfolio]. 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.