It might be hard to fathom, but the SPDR Gold Shares (NYSEArca: GLD) is up 2.8% in the past week. Still, the world’s largest ETF backed by holdings of physical gold is down 7.6% in the past month and 23.6% in the past six months, a decline that has the yellow metal in position to end its 12- year winning streak.
Declines for GLD and rival gold-backed ETFs have prompted significant outflows. As of July 12, GLD held about 30.2 million ounces of physical gold, which is at a 4 1/2 year low. Over the past week, GLD lost $1 billion in assets, the largest biggest weekly loss of 2.6% since the end of April. [Gold ETFs See Outflows Despite Higher Prices]
And those declines have lead to an ominous technical situation for gold futures and GLD. Gold futures have closed below the 200-day moving average for five consecutive months dating back to Feb. 11, 2013, the longest such streak since the eight months to March 2001, reports Nicholas Larkin for Bloomberg.
Moving averages are used by some technical analysts to confirm trends and a security that labors below its 200-day line for extended periods of time is thought to be in a bear market. Traders also believe that securities that decline 20% or more from the most recent peak are in a bear market and GLD confirms that with an almost 24% six-month decline. [Investors Test Gold ETF Waters After Sell-Off]
As is the case with gold futures, GLD last traded above its 200-day moving average in February and the ETF now resides 18.6% below that line on the daily chart. The ETF is also 5.3% below its 50-day moving average, but the fund is slightly above its 20-day moving average for the first time since June.
Gold has its work cut out. There is the matter of psychological resistance at $1,300 an ounce, then a combination of resistance levels in the $1,320 to $1,340 area will probably spur selling, Bloomberg reported, citing Barclays. The bank believes gold would need to move above $1,522 an ounce, which would likely take GLD above $150, before buyers are motivated to step in.