Conclusion, Investment Implications, Strategy

The SPDR Gold Shares (GLD) ETF has risen by 6.2% since our Apr 21st buy idea was issued to clients while outperforming the S&P 500 by 5.4%.  Meanwhile, the total net assets invested in GLD continue to expand, which is the necessary fuel to keep these prices moving higher.  Major underying support is currently 3% below the market at 173.22.  The next formidable overhead resistabce level is an additional 3% above the market at 182.40.

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. 

The upper panel of Chart 1 below, an updated version of the one from that report, shows that GLD has steadily risen since then while remaining above its 50-day moving average (minor trend proxy), and more recently has also risen above its 200-day MA (major trend proxy).  Meanwhile, the lower panel shows that the total net assets invested in GLD have continued to expand, which is the fuel that has pushed prices higher.

Chart 1

GLD Performance Thus Far

The upper panel of Chart 2 below shows that GLD has risen by 6.2% since our Apr 21st report.  It also highlights the 200-day MA at 172.33, which we view as major underlying support.  What appears to be an emerging major bullish trend change in GLD will remain valid above this support.

Chart 2

The lower panel shows that GLD has also outperformed the benchmark SPDR S&P 500 ETF Trust (SPY) by 5.4% during the same period.  In our view, holding gold has particular value when it is outperforming the stock market, rather than just being a portfolio hedge that sits there and doesn’t add performance.

 

Where’s The Next Key Levels?

Chart 3 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 final level of overhead resistance is the August 2020 all-time high of 194.45, currently 9% above the market.

Chart 3

Below the market, as stated earlier, major underlying support is 3% below the market at 173.22 and represents the 200-day MA.