This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

GLD Is at a Critical Inflection Point

NEW YORK (TheStreet) -- One of the biggest stories in the financial markets in the last few months has been the turnaround rally in gold prices. This relatively strong rebound from the yearly lows has led many to believe that the strong downtrend that has characterized most of this year has finally come to an end.

But whether or not these assessments are correct could be determined next week, as a critical set of event risks could set prices on the trend that will mark the latter parts of this year.

Investors holding the SPDR Gold Trust ETF (GLD) have seen losses of nearly 20% for the year to date (even with this latest rally), so calling these recent price moves a true "turnaround" is still premature.

At the end of last week, prices in GLD were showing gains of 2.95% for the period, as valuations in spot gold were helped higher by the weakening U.S. dollar. Market sentiment toward the U.S. currency is being largely (and, perhaps, inappropriately) based on changing expectations for the Federal Reserve's next steps in quantitative easing. Changes in these expectations have been driven by ambiguous statements from Fed Chairmen Ben Bernanke, which have done little more than indicate that these programs will not follow a "preset course."

Since Bernanke was well aware of the fact that markets were shifting toward the expectation that stimulus tapering would begin in September, the lack of clear direction at the Fed was subsequently interpreted as dovish -- with some analysts even suggesting quantitative easing purchase could increase if data remains weak.

Upcoming Event Risks

But with prices at current levels and some important event risks in the coming week's sessions, those holding GLD now find themselves at an important set of crossroads that could determine how market look into the end of the year. Specifically, the next round of central bank monetary policy decisions will be a critical determinant, as will the next non-farm payrolls and unemployment reports.

Outcomes here will help support (or contradict) the partial market view that we could still see reductions in monetary stimulus in September. Central bank meetings will be held by the Federal Reserve, Bank of England, and the European Central Bank and while no significant announcements are expected at the conclusion of these meetings, the accompanying rhetoric will create additional volatility and provide some direction for how markets are likely look in the next few months.

Stock quotes in this article: GLD 

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs