Gold prices have captivated investors for quite some time. With the rise in gold, silver and other precious metal prices this year, there’s been plenty of emphasis on this area as of late.
The chatter has quieted down over the last few weeks as the run in precious metals has calmed.
However, the technicals have been firming up in the meantime, as gold consolidates its most recent run. With the Federal Reserve in focus this week, it could have an outsized impact on the dollar and on the metals.
Given that the Fed’s easy-money approach has been one of the catalysts for gold this year, it’s no surprise that the Fed will be in focus for silver and gold traders.
Along with a flight-to-safety and an urge to diversify - even as stocks soared - gold has done quite well. Here’s how the charts are looking now.
Trading the Gold ETF
For the sake of simplicity, I will look at the SPDR Gold ETF (GLD) - Get SPDR Gold Trust Report, but there are multiple ways to play gold. That includes gold futures, individual gold miners like Newmont Goldcorp (NEM) - Get Newmont Goldcorp Corporation (NEM) Report or an ETF approach to the miners via the VanEck Gold Miners ETF (GDX) - Get VanEck Vectors Gold Miners ETF Report.
As for the GLD, note the consolidation between $157.50 and $165 from April through June. In June, gold was able to break out, launching the GLD toward $195 in about six weeks. That came close to $197, a level we mapped out a few months ago.
Now digesting those gains, bulls are looking for the rally to resume to the upside.
Range support near $179 held as support multiple times since early August. The most recent retest coincided with a gap-down to the 50-day moving average, which sparked a rally off the opening lows on September 8th.
That rally hasn’t been robust, but it’s been enough to send shares back over the 10-day and 20-day moving averages and up into downtrend resistance (blue line).
Now the GLD is in a precarious place. We need to see a rotation over last week’s high at $184.68. Incidentally, Tuesday’s high is just a penny shy at $184.67.
If it can clear this mark and close above it, we could see a squeeze up to the September high near $187, followed by a possible gap-fill near $190. Above $190 and the 2020 high is in play at $194.45, followed by $200.
On the downside, a break below the 10-day and 20-day moving average signals caution. However, on a close below the 50-day moving average and range support, and bullish traders may want to avoid the GLD and wait for the yellow metal to reset before buying again.