Gold Is Basing For Next Bullish Wave

Gold GLD

In 2019, one of the market’s most surprising stories has been the massive bull trend movement that has been established in gold. Additionally, a series of unpredictable changes occurred in the realm of monetary policy, as the Federal Reserve has already broken with its long-standing position to raise interest rates as a way of preempting continued expectations for growth. In the U.S., the latest evidence in the national GDP readings implies growth rates that are close to zero for the fourth quarter. Overall, this is not a bullish scenario for stocks —even with the S&P 500 trading near its record highs. 

My regular readers know that I often tend to look at market inflow activity in some of the precious metals industry’s most popular exchange-traded funds (ETFs). This would also include instruments like the VanEck Gold Miner’s ETF, which is a topic I discussed in a June article. Ultimately, this type of approach to baseline fundamental analysis can provide important clues that help identify price trends that are likely to begin reversing relatively soon.  

Most directly, we can see that recent activity in the SPDR Gold Trust ETF (NYSE: GLD) has shown outflows worth $1,308.7 million over the last four weeks. However, this figure might paint a very different picture when compared to various time horizons. In the last 13 weeks, GLD has seen inflows of $2,330.9 million but this figure actually grows to $7,191.3 million over the past 26 weeks. Overall, these are significant differences that give us a fundamental reason to believe that there will be underlying strength in any technical trading events that are generated as a result of 2019’s bullish trend moves.

(Click on image to enlarge)

Gold GLD

Using the price valuations in GLD, we can isolate these important price levels as falling near $106.80, $112.05, and $126.50.This first level marks the lows from December 2016 while the second level marks the lows from August and September 2018. The third level on the GLD price chart shown above is meant to mark the highs from February 2019. This final price zone will now be expected to act as support once the GLD valuation overcame resistance at these levels.

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For additional information on how I use the Commodity Channel Index to gauge price momentum, see my tutorial on Momentum Trading ...

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