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Friday’s ETF Chart To Watch: SPDR Gold Trust (NYSEARCA:GLD)

December 7th, 2012

Stoyan Bojinov: Stocks managed to grind higher on Thursday despite looming “fiscal cliff” woes keeping a lid on confidence, as investors couldn’t help but cheer on better-than-expected weekly employment data. This week, 370,000 people filed for unemployment benefits versus the previous reading of 395,000, marking another stride forward in the domestic labor market recovery. Overseas, the European Central Bank kept rates steady at 0.75% as the currency bloc’s GDP contracted by 0.6% over the last quarter, serving as a grim reminder of the region’s massive debt burden.

Our spotlight will shift to the State Street SPDR Gold Trust (NYSEARCA:GLD) for the day as gold futures prices could be in for a wild trading session following the release of the latest monthly U.S. employment report at the opening bell. Even the slightest miss in today’s report may lead to a nasty sell-off given the added pressures of the “fiscal cliff” on the domestic economic recovery. Analysts are expecting for nonfarm payrolls to come in at 80,000 versus last month’s figure of 171,000, while the unemployment rate is expected to remain unchanged at 7.9%.

Chart Analysis


Gold has offered little to no refuge from stock market volatility stemming from fiscal cliff woes judging by the yellow metal’s lackluster performance over the last two months. Since recently peaking at $174.07 a share on October 4, 2012, GLD endured a steep correction, which sunk it all the way down to its 200-day moving average (yellow line). Although this ETF quickly rebounded off its historical long-term price average in early November, selling pressures have returned and GLD is once again back below the $165 level [see The 5 Most Important Chart Patterns For ETF Traders].

Click to Enlarge

GLD could face further profit-taking pressures in the near term as evidenced by its recent string of lackluster performances and lack of “safe haven” appeal. Nonetheless, long-term buying opportunities are still on the horizon given the fund’s steady uptrend (blue line) over the long haul [Download 101 ETF Lessons Every Financial Advisor Should Learn].

Outlook

If the latest employment report misses the mark, volatile trading may sweep over Wall Street and send investors to the safe havens; in terms of upside, GLD has near-term resistance around $168 a share followed by major resistance at the $175 level. On the other hand, upbeat employment data can prompt investors to increase their risk appetite; in terms of downside, GLD has immediate support around $162 a share  followed by the $160 level. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit-taking techniques.

Written By Stoyan Bojinov From ETF Database Disclosure: No Positions

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