The SPDR Gold Shares ETF (GLD) has been one of the strongest equities in the market since March 16, 2020. The GLD traded as low as $136.12 a share in mid-March before surging to the upside. On April 14, 2020, the GLD traded as high as $164.42 a share. Since that high pivot, the GLD has simply been trading sideways and is currently trading around the $160.00 level. Traders and investors should note that this is a consolidation pattern from a very overbought condition. In fact, the longer a stock or ETF consolidates in this manner, the more likely it is to trade higher in due time.
Central banks have been very accommodating since the virus scare began. In fact, they have injected massive liquidity into the system very quickly. This is much was different from 2008 where they hesitated before implementing the cash injection. The Federal Reserve has also said that they stand ready to act further if necessary. Basically, many people are calling this program “QE-unlimited.” All of these efforts by the Federal Reserve and the other central banks around the world make a very bullish case for gold. While the fundamentals for gold look very solid it is important to remember that traders should remain patient here and continue to monitor this pattern in the GLD and the other gold equities. Remember, gold is still consolidating at this time and may need to do more of it before the next leg higher. Keep it on close watch and you will be ready for the next big move in gold.
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