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

by on January 30, 2013 | ETFs Mentioned:

Buying pressures continue to reign supreme on Wall Street as equities tallied yet another session in green territory; the S&P 500 Index posted a fresh five-year high yesterday, settling just shy of the 1,510 mark as the closing bell rang. Upbeat earnings from healthcare giants Pfizer and Eli Lilly & Co. kept optimism alive and overshadowed the lackluster consumer confidence data on the day, which came in at 58.6 versus the expected 64.3 [see Visual History Of The S&P 500].

Today is shaping out to be an eventful day on Wall Street as investors will digest several key releases. First, U.S. GDP data is slated to hit the street at the opening bell, which could encourage volatile trading in the State Street SPDR Gold Trust (GLD, A-) as investors shift between risky and safe haven assets. Second, the FOMC announcement is scheduled to take place in the afternoon, which could further sway the price of gold as investors digest economic insights from policymakers [see GLD-Free Gold Bug ETFdb Portfolio].

Chart Analysis

GLD has been dragging sideways with a downward bias over the last few months as the improving economic outlook has largely eroded the appeal behind safe haven assets. From a technical perspective, this ETF has been stuck in a fairly well-defined trading channel (red lines) since peaking at $174.07 a share on October 4, 2012; notice how GLD has been consistently posting lower-highs and lower-lows, which suggests that further downside is in sight should this price pattern hold [see 17 ETFs For Day Traders].

Click to Enlarge

One piece of bullish evidence is the fact that this ETF appears to be building out support at $160 a share; notice how GLD has managed to hold above this level on several occasions since late December of 2012. Although buying in at current levels offers lucrative upside potential, conservative investors should be aware of the prevailing downtrend at hand [Download 101 ETF Lessons Every Financial Advisor Should Learn].


If the latest GDP report suggests stronger-than-expected economic growth, safe havens like gold may be in for a rough day; in terms of downside, GLD has immediate support around $160 a share. On the other hand, dismal growth and pessimistic commentary from the Fed may inspire a rebound in the gold market; in terms of upside, GLD has resistance at $165 a share. 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.