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

by on November 29, 2012 | ETFs Mentioned:

Stocks kicked off yesterday’s trading session with worrisome losses only to come back and stage a massive rebound, ending in bright green territory as the closing bell rang. Optimism over the looming “fiscal cliff” returned to Wall Street as President Obama laid out a timetable to hammer out a deal by Christmas, as opposed to dragging out negotiations until December 31 like many had anticipated. In economic news, October new home sales data missed the mark, although investors payed little attention to this hiccup; the figure came in at 368,000, falling short of the estimated 390,000 [see 5 Important ETF Lessons In Pictures].

With U.S. GDP slated to come out at the opening bell later today, our spotlight will shift to the State Street SPDR Gold Trust (GLD, A-), which may experience volatile trading as markets digest the latest data. Gold prices may face headwinds throughout the day if market expectations come to fruition; analysts are expecting for the latest economic growth reading to come in at 2.8%, marking a fairly largely improvement from the previous reading of 2.0% [see GLD-Free Gold Bug ETFdb Portfolio].

Chart Analysis

Gold has offered minimal refuge from stock market volatility over the past few weeks as fiscal cliff fears have plagued nearly every asset class without mercy. GLD’s recent pullback appears to be a healthy correction seeing as this ETF remains on an upward trajectory (blue line) and is trading above its 200-day moving average. Nonetheless, we would advise conservative investors to be wary of pulling the buy trigger at current levels given GLD’s historical price pattern; looking back, it’s quite clear that this ETF has previously failed to summit the $170 level (purple line) after failing to summit the $175 level (red line) as seen in early December of 2011 [see 3 ETF Trading Tips You Are Missing].

Click to Enlarge

If GLD’s 2011 price pattern holds true, this ETF could see lower-lows in the coming sessions as selling pressures are bound to accelerate if shares sink below support at the $165 mark [see ETF Technical Trading FAQ].


If the latest U.S. GDP report paints a bullish outlook, gold prices could face strenuous headwinds on the day; in terms of downside, GLD has immediate support at $165 a share followed by the $162 level. On the other hand, a disappointing economic growth reading may spark a flight to the safe havens; in terms of upside, GLD has major resistance around $170 a share. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit-taking techniques.

Follow me on Twitter @SBojinov

[For more ETF analysis, make sure to sign up for our free ETF newsletter or try a free seven day trial to ETFdb Pro]

Disclosure: No positions at time of writing.