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

by on July 27, 2012 | ETFs Mentioned:

Stocks snapped their losing streak yesterday as reassuring comments from European Central Bank chief Mario Draghi helped restore investors’ confidence in the financially fragile currency bloc. The bulls sprung into bargain shopping mode after Draghi’s comment, “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro.” Optimism overshadowed worse-than-expected pending home sales data on the homefront, although solid weekly jobless claims and durable goods orders did help to inspire hope surrounding the domestic recovery [see also 5 ETFs For Fiscally-Sound Emerging Markets].

Investors will keep their focus at home today as the latest U.S. GDP report hits the street at the opening bell. As such, our ETF to watch for the day is the State Street SPDR Gold Trust (GLD), which may experience volatile trading depending on the latest economic growth reading. Analysts are expecting for U.S. GDP to come in at 1.3%, marking a modest contraction from the previous reading of 1.9% [see also Were Gold And Silver Manipulated Alongside LIBOR?].

Chart Analysis

Since its most recent peak at $174 a share on February 28, 2012 GLD has fallen victim to steady profit-taking pressures; notice how this ETF has posted a series of lower-highs (red line) and lower-lows, showcasing how bearish pressures have undoubtedly been the dominant force in recent months. At the same time, this recent decline appears to be a healthy correction seeing as how GLD is holding above support at the $150 level, similar to how it bounced off the same level back at the start of 2012 after shares sank to $148.27 on December 29, 2011 [see also How To Lose Money Trading ETFs].

Click To Enlarge

One piece of bullish evidence that points to higher prices for GLD in the coming weeks is the fact that it has managed to move along a rising support level (blue line). Although GLD has yet to break above the $160 level, its slowly rising support level could help propel it higher assuming that selling pressures don’t break the ongoing trend of higher-lows [see also ETF Technical Trading FAQ].


If today’s GDP report sends investors running to the safe havens, GLD could find itself rallying higher; in terms of upside, this ETF has resistance around $157.50-$160 a share. On the other hand, a surprisingly strong U.S. GDP report could inspire bullish pressures on the homefront and potentially pave the way lower for gold; in terms of downside, this ETF has support at $152 a share followed by the $149 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.