Gold is hurting bad with the key markets lower this morning. Currently it is being traded as a risk asset rather than as an inflation or rush to safety asset as we have been used to seeing. And now things may even be worse for a while if its stock chart has anything to say.
The SPDR Gold Shares (NYSE: GLD) did not just have a test of its 50-day moving average as it has been seeing in recent days. It blow through it with a huge gap-down and a clear violation has taken place. While not the end of the world, the chart from stockcharts.com shows clearly that this 50-day average is a key issue right now and the last time gold violated its 50-day moving average by this much that things got a little worse and then floundered for a while.
The good news is that the chart also shows that gold (and the ‘GLD’) can recover. On a longer-term basis we are still in a period that show lower highs but not lower lows. That signals from a cocktail napkin chartist viewpoint that gold currently is not wanting to break down entirely even if it is perhaps seeking a lower base level.
Our fundamental take is that gold is being held hostage like every other market with the situation in Europe. International market participants are back to looking at the dollar as the safe haven asset rather than gold. That can last for quite some time, so long as inflation does not come on abruptly.
The SPDR Gold Trust ETF is trading down 2.8% at $161.80 and this violates the November 21 low of $162.07 and takes it back to the lowest price since October 25, 2011 when a low of $160.41 was put in.
JON C. OGG
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