Technical Analyst: Gold Will Go Sideways for the Rest of August

Stack of gold coinsGary Savage: Technical analysis suggests that gold prices will stay in their doldrums for the next three weeks, prior to embarking on their next rally.

In my last chart of the day I noted that gold and the metals sector in general were too stretched above the 200 DMA and would likely have to churn for awhile before the next leg up could begin. After seeing the sell off following Friday’s employment number I think I probably called that one correctly. The metals may have to churn sideways for most of August before the next rally begins.

Gold: Sideways

I’m going to go over in detail this weekend what I think the sell off on Friday in the metals means for the sector. Hint: It’s not that bearish.

The SPDR Gold Trust ETF (NYSE:GLD) fell $2.32 (-1.79%) on Friday, closing at $127.55 per share. Still, the GLD has gained more than 25% year-to-date, which is more than three times the return of the S&P 500 in the same period.

GLD-2016-08-07

GLD is the most popular way for investors to gain exposure to gold without having to buy any physical metal, because for the most part it does a pretty good job of reflecting the price changes in gold bullion. Established in 2005, GLD is the sixth largest ETF in the U.S., with over $42 billion in assets.

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