In the past 3 US market trading days, GLD has run up from 139.52 to a high of 142.47, a gain of 2.11%. That doesn’t sound like a lot, but it means international gold is now well above the psychological 1500 level (in USD). And as we all know, psychological levels can be very strong once they’re breached. Gold has had the opposite problem with 1500 since Nov 4th when it fell below 1500 and hasn’t been able to claw it’s way back – until now.
Your friendly Gold Enthusiast lays responsibility for this latest pop squarely on the feet of increased geopolitical uncertainty. The US-China trade war seems to go from OK to worse, back to OK, then another dimension of worse seems to rear its head. Now it looks like Phase One still has a way to go to get signed, and the “real deal” isn’t likely until at least summer, or possibly after the US presidential election.
Signs of economic weakness continue to pop up as well. The latest US durable goods report showed a softening of 2% when an increase was expected. It’s one thing for a reported increase to be below expectations; another thing for a plus to turn into a minus.
Then apparently investors noticed gold was ripe for the picking. Look how volume for GLD rose each of the last 5 trading days.
Also, note that RSI is now up in overbought territory, so don’t be surprised if we see a sideways day in GLD today. Ideally, we’d see a flat day with a decrease in RSI. But we don’t always get what we want. Stay cautious for now.
The Gold Enthusiast
DISCLAIMER: No securities were mentioned in this article. The author is long the overall gold sector via positions in NUGT, JNUG, a few junior miners, and covered calls on part of the NUGT and JNUG positions. The author may trade options positions in NUGT and/or JNUG in the next 48 hours if market conditions warrant.
The SPDR Gold Shares (GLD) was trading at $142.41 per share on Friday morning, up $0.03 (+0.02%). Year-to-date, GLD has gained 15.17%, versus a 21.46% rise in the benchmark S&P 500 index during the same period.
About the Author: Mike Hammer
For 30-plus years, Mike Hammer has been an ardent follower, and often-times trader, of gold and silver. With his own money, he began trading in ‘86 and has seen the market at its highest highs and lowest lows, which includes the Black Monday Crash in ‘87, the Crash of ‘08, and the Flash Crash of 2010. Throughout all of this, he’s been on the great side of winning, and sometimes, the hard side of losing. For the past eight years, he’s mentored others about the fine art of trading stocks and ETFs at the Adam Mesh Trading Group.