Can GLD’s Rebound Weather FOMC Minutes?

The bulls are at it again this week as stimulus hopes have taken center stage at home and in the eurozone. Investors on Wall Street continue to digest corporate earnings results, which for the most part are coming in better-than-expected; however, looming FOMC minutes and Friday’s monthly employment report will surely steal the spotlight this week. Overseas, investors are anticipating for the European Central Bank to cut rates down to 0.5% from 0.75%, potentially paving the way higher for gold prices as inflation fears return.

Chart Analysis

Consider the one-year daily performance chart for the well-known SPDR Gold Trust (GLD) below. This ETF endured a nasty sell-off spanning from 4/12 to 4/15 after massive profit taking pressures swooped in and inevitably triggered countless stop-loss orders along the way; note that the blue line in the chart signifies GLD’s historic support around $150 a share, and as you can see, the downside damage was only exaggerated as prices dipped below this closely watched support level.

GLD’s rebound over the last two weeks has been encouraging for precious metals investors, but the rally may soon run out of steam when considering the prevailing trading volumes; notice how the big down days were accompanied by above-average trading volumes, while the recent rebound has seen declining volumes, perhaps hinting at a potential trend reversal in the near future.

The upcoming FOMC minutes at home and the expected European Central Bank rate cut will serve as fundamental catalysts for GLD as investors will surely look to re-position their portfolios following any policy changes. Any hints of continued easing and “loose money” policies should bode well for gold as inflation fears return. On the other hand, any mentions of improving economic conditions could hinder GLD’s performance on the day, as investors jump ship to riskier assets [see 5 Commodity Trading Mistakes You Could Be Making].

Source: http://commodityhq.com/2013/can-glds-rebound-weather-fomc-minutes/

Can GLD’s Rebound Weather FOMC Minutes?

The bulls are at it again this week as stimulus hopes have taken center stage at home and in the eurozone. Investors on Wall Street continue to digest corporate earnings results, which for the most part are coming in better-than-expected; however, looming FOMC minutes and Friday’s monthly employment report will surely steal the spotlight this week. Overseas, investors are anticipating for the European Central Bank to cut rates down to 0.5% from 0.75%, potentially paving the way higher for gold prices as inflation fears return.

Chart Analysis

Consider the one-year daily performance chart for the well-known SPDR Gold Trust (GLD) below. This ETF endured a nasty sell-off spanning from 4/12 to 4/15 after massive profit taking pressures swooped in and inevitably triggered countless stop-loss orders along the way; note that the blue line in the chart signifies GLD’s historic support around $150 a share, and as you can see, the downside damage was only exaggerated as prices dipped below this closely watched support level.

GLD’s rebound over the last two weeks has been encouraging for precious metals investors, but the rally may soon run out of steam when considering the prevailing trading volumes; notice how the big down days were accompanied by above-average trading volumes, while the recent rebound has seen declining volumes, perhaps hinting at a potential trend reversal in the near future.

Click to Enlarge

The upcoming FOMC minutes at home and the expected European Central Bank rate cut will serve as fundamental catalysts for GLD as investors will surely look to re-position their portfolios following any policy changes. Any hints of continued easing and “loose money” policies should bode well for gold as inflation fears return. On the other hand, any mentions of improving economic conditions could hinder GLD’s performance on the day, as investors jump ship to riskier assets.

Source: http://commodityhq.com/2013/can-glds-rebound-weather-fomc-minutes/

Gold Traders and Investors, Get Ready to Rumble!

On April 2, and again on April 12, I wrote a blog post titled Precious Metals Meltdown, and How to Manage It. I talked about how gold, silver, and gold mining stocks have been flying under the media radar for over a year, and the fact that they were not catching the attention of traders, investors, and the public anymore. I also said it would take some sharp price action (breakdown or rally) for them to be front and center again on TV, radio, and in newspapers.

But since gold has plummeted 17.5%, dropping from $1600 down to $1320 per ounce with silver and gold stocks falling as well, they are now headline news once again. This move has caused some serious damage to the charts when looking at it from a technical analysis point of view. Below are some basic analysis points that show a new swing trading entry point.

Chart Analysis

Broken Support — Once a support level has been broken, it becomes resistance. Gold is trading under a major resistance level.

Momentum Bursts Since the April 15 low, gold has been setting up for another short selling entry point. Remember, the market tends to move in bursts of three, seven, or 10 days, then price reverses direction or pauses. It has now been 10 days.

Moving Average Resistance – Gold has worked its way up to the 20-day moving average, which can act as resistance.

Bearish Inside Bars – This type of chart pattern points to lower prices. When there is a big down day followed by three, seven, or 10 up days inside the price action of the down bar we can typically expect another sharp drop which tests the recent lows (as shown with the arrow on the chart).

Gold Short Selling Conclusion

In short, gold is setting up for a low risk entry point that should allow you to profit from lower gold prices. The Deutsche Bank AG DB Gold Double Short ETN (NYSEARCA:DZZ) or even the gold mining stock inverse ETF Direxion Shares Exchange Traded Fund Trust (NYSEARCA:DUST) could be played. These funds go up in value as the price of gold falls.

While I expect gold to pullback, I do not think it will make another leg lower. Instead, I expect a test of the recent low or pierce of the low by a few bucks, then a reversal and the building of a bullish basing pattern before going higher.

Source: http://www.minyanville.com/sectors/precious-metals/articles/Gold-Traders-and-Investors-Get-Ready/4/30/2013/id/49545