Monday, April 22, 2019
Gold & SilverStocks

Gold – Looking At A Massive Breakout

by Nikhil Gupta



  • Gold closes above the 30-day SMA and sustains higher.
  • The SPDR Gold Trust ETF follows suit.
  • Both are expected to cross their strong overhead resistances in the near-term.

Escape Velocity is a term which refers to the minimum speed that an object needs to break free from the Earth’s (or any other planet’s) gravitational pull and escape without further propulsion. I am expecting a similar scenario in gold and GLD. What could be the trigger? Two things immediately come to mind: A near-term breakdown in the U.S. dollar or fear returning to the broader markets.

On March 16, I had submitted an article titled Gold – This Opportunity Will Pass Sooner Than You Think in which I had commented that investors should get into gold since the precious metal could cross the overhead resistances pretty soon. As for the SPDR Gold Trust ETF GLD, I expect it to surpass $120 by next week.

The daily GLD price chart below indicates that the ETF is steadily crossing the technical hurdles with consistent buying interest. A couple of sessions ago, the ETF closed above the 30-day SMA of $117.19 after taking out the 50-day SMA following the Fed rate hike. Very quickly, GLD has not only crossed two important SMAs but is also sustaining above the 23.6 percent Fibonacci retracement of $117.20. I believe that bulls will find no trouble in crossing the recent peak of $120.40, which coincides with the 200-day SMA of $120.27. Sustenance above the 200-day SMA will bolster the ETF to break out from its medium-term downtrend.

GLD is witnessing strong buying interest with help from an equally strong recovery in gold prices. The daily gold futures price chart clearly tells that the precious metal has witnessed five consecutive positive sessions as momentum shifted in the favor of buyers. Similar to GLD, the precious metal is also sustaining above the 30-day and the 50-day SMAs and is about to test the 200-day SMA at $1262.72. At the time of writing this article, gold is repeatedly attempting to remove the bears at the psychological level of $1250.

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