GLD ended last week around $109.50 and ended today just above $109 on light volume.  Although the action the last two sessions  have been slightly negative,  the price action of gold definitely surprised a number of longs last week. Gold held up well to 2 huge and potentially negative news stories last week.   The first was the Fed discount rate hike.  The discount rate is the interest rate at which banks borrow on loans directly from the Fed.    By itself, the incremental move – from .50 percent to .75 percent – is not significant, but it’s regarded as more of a symbolic sign that the Fed is nudging the economy back to business as usual.   The knee jerk reaction of investors was that gold should be dumped as the dollar would see a short term rise as the Fed sees economic recovery on the horizon.  After a turbulent morning session, gold was able to rebound and essentially remain unchanged.  The second test of gold was around the news that the International Monetary Fund was going to unload 191.3 tons of gold to the open market.     “In accordance with the priority of avoiding disruption of the gold market, the on-market sales will be conducted in a phased manner over time,” the IMF said last Wednesday in a statement. Gold futures prices dropped to $1,098.10 an ounce in afterhours trading following the release, But as the market digested the news, the metal has recouped losses during Thursday session.  

This week has been relatively quiet on news and gold has traded sideways and slightly down through Monday.  In looking at the GLD ETF chart above, there is support at the 50 day Moving Average at 108.58 as well as at the Bollinger Band Midpoint at 107.27.  We expect that GLD will hold its ground this week and test the Upper Bollinger Band at just under $111.00 as it marches back towards its December 09 high.

Popularity: 12% [?]