Gold At A Tactical Decision Point

Conclusion, Investment Implications, Strategy

The SPDR Gold Shares ETF (GLD) is currently trading just above a Tactical decision point, at 174.66 to 172.91, from which its new major uptrend must resume if still valid. Should this support hold, GLD’s next overhead resistance levels are an additional 3% and 10% above the market at 182.40 and 194.45. Should 174.66 to 172.91 support be broken on contracting investor assets, however, it would warn that GLD’s previous February-April major downtrend is resuming.

Introduction

In our Apr 21st Special Report entitled Gold ETF (GLD) Bottoming? we pointed out that the SPDR Gold Shares (GLD) ETF had recently made a minor bullish trend change amid expanding investor asset flows and said this pointed toward significantly higher prices in the weeks and months ahead. About 5 weeks later, in our May 26th report entitled Gold Prices Rising, Outperforming Stocks, we pointed out that GLD had already risen by 6.2% since Apr 21st while outperforming the S&P 500 by 5.4% on expanding investor assets. But, since then, the gold rally has stalled.

In today’s report we take an updated look at our Apr 21st long idea in GLD, identify where Tactical (monthly) support is, explain what has to happen for the recent rally to continue, and point out where the next overhead resistance levels are.

GLD At A Tactical Decision Point

The upper panel of Chart 1 below plots GLD daily since January along with its 200- and 50-day moving averages, widely-watched major and minor trend proxies. The lower panel plots the daily total net assets invested in gold along with their 21-day (monthly, our Tactical time frame), moving average.

Chart 1

The middle green highlights show that GLD rose above its 50-day MA on Apr 21st on a new trend of monthly expansion by the total net asset invested in GLD. This positive minor trend change on expanding assets fueled the rally above the 200-day MA, indicating a major bullish trend change, and up to the Jun 1st rally high. That’s when these assets stopped expanding, which has resulted in a stall in the rally.

The right edge of the chart shows that these assets are now testing their 21-day MA from above and may be starting to expand again, while GLD is testing major support at its 200-day MA. This sets up a Tactical decision point for GLD. If the current major uptrend is still intact, underlying support at 174.66 (the Jun 3rd low) to 172.91 (the 200-day MA) should contain on the downside while the total net assets invested in GLD should start expanding again from their 21-day MA. If this does not happen, it will warn that the March rally is over.

Potential Next Stops On The Upside

Chart 2 below plots GLD daily over the past year along with its 50- and 200-day MAs. The red highlights show that the next significant level of overhead resistance is an additional 3% above the market at 182.40 and represents the January and November 2020 benchmark highs. Above there, the next level of overhead resistance is the August 2020 all-time high of 194.45, currently 10% above the market.

Chart 2

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Gold At A Tactical Decision Point

Conclusion, Investment Implications, Strategy

Introduction

GLD At A Tactical Decision Point

Potential Next Stops On The Upside

Asbury Research

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and updates to our quantitative models

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Gold At A Tactical Decision Point

Conclusion, Investment Implications, Strategy

Introduction

GLD At A Tactical Decision Point

Potential Next Stops On The Upside

Asbury Research

Asbury Research subscribers get more detail on our latest analysis, and updates to our quantitative models

Schedule A 15-Minute Zoom Meeting With Us To Get More Information >>>

Asbury Research subscribers get more detail on our latest analysis,
and updates to our quantitative models