Will GLD Continue To Glimmer?

SPDR Gold Trust ETF GLD traded above its 200 day exponential moving average for the second time in a week. This got our attention for a number of reasons. We noted that GLD had been in an uptrend since the beginning of the year and after considering the geopolitical situation in Ukraine and Russia, we decided to take a closer look.

The previous time that GLD was above its 200 day exponential moving average was in January 2013. Since then it had been in a downward trend, which was not surprising considering the relatively stable world economy and investors’ increased tolerance of risk in the stock market.  On June 28, 2013, GLD marked its low for the year-to-date at $114.68. It tested that low and closed even lower at $114.50 on December 19, 2013 and set its low for the calendar year at $114.46 on December 31, 2013, causing a Triple Bottom (for a detailed explanation, click here  to watch the video)  Aggressive traders started taking the trade at that point (see chart below).

With the political situation in Russia and Ukraine becoming more unsettling during the last week, the more conservative traders are now also starting to retreat to GLD. We looked at iShares Silver Trust ETF SLV to confirm the GLD trend as precious metals generally tend to move in the same direction (see chart below). 

We noted that SLV successfully tested its 200 day simple moving average on March 3, 2014, giving us even more reason for optimism that GLD should continue its upward momentum.

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