How Much Longer Will the Gold Sell-Off Last?

gold in handGold prices rallied Thursday morning, pointing to a potential respite in the sell-off that has consumed the yellow metal for the past two weeks.

The SPDR Gold Trust ETF (NYSE:GLD) gained $0.85 (0.68%) in mid-morning trading to $126.24. The world’s largest gold ETF has had a rough go of it lately, following a blockbuster first half of the year.

Analyzing the chart above, we can see a similar sell-off in GLD occurred in the month of May, with GLD touching the $115 level before rallying throughout most of June. After a brief pullback in late June, gold prices shot right back up until the middle of July, when the latest sell-off took shape.

GLD should have strong support around the $120 level, which is good news for gold investors. That level has been tested and re-tested several times this year.

If prices break down below $115, however, the next levels of support are $110 and then $100. It’s unlikely we’ll see those levels any time soon though, considering the continued turmoil in Europe, Turkey, and elsewhere. Foreign investors have long buoyed the price of gold and sought it out during tumultuous political periods.

If we were placing bets now, we’d look for some sideways action in GLD over the next several weeks, with a potential break-out to the upside toward the end of summer as the U.S. presidential election nears.

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