Conclusion, Investment Implications, Strategy
The SPDR Gold Shares (GLD) ETF has recently made a minor bullish trend change amid expanding investor asset flows. As long as GLD remains above its 50-day MA, currently at 164.00, amid continued asset expansion it suggests an eventual retest of its 194.45 August 2020 all-time high.
Analysis and Rationale
The SPDR Gold Shares (GLD) ETF seeks to reflect the performance of the price of gold bullion, less the expenses of the Trustâs operations. The Trust holds gold bars and from time to time, issues Baskets in exchange for deposits of gold and distributes gold in connection with redemptions of Baskets. The investment objective of the Trust is for the Shares to reflect the performance of the price of gold bullion, less the Trustâs expenses. The Sponsor believes that, for many investors, the Shares represent a cost-effective investment in gold.
The upper panel of Chart 1 below plots GLD daily since December 2020 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 rightmost green highlights in the upper panel show that GLD moved above its 50-day moving average as of April 15th, indicating a minor bullish trend change and also confirming a bullish chart pattern, a double bottom, that targets an additional 2% rise to 170.70. The green highlights in the lower panel show that the daily total net assets invested in GLD have simultaneously moved back above their 21-day moving average for the first time since Jan 11th, indicating an emerging trend of monthly expansion that is characteristic of sustainable rises in price.
As long as GLD remains above its 50-day MA, currently at 164.00, amid a trend of monthly asset expansion, we will expect the recent strength in GLD, and in the gold prices it represents, to continue and to eventually retest the 194.45 August 2020 all-time high.
Table 1 below shows that considering the aforementioned upside target and a protective stop placed below the 161.81 area, a long entry price of 167.94 would provide a 1:4.3 risk/reward ratio (risking $1.00 to make $4.30) with an initial risk of 3.7%.
Table 1
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