Gold exchange traded products, including the SPDR Gold Shares (NYSEArca: GLD), rallied amid the “Shocktober” equity market swoon, but have shown little ability to follow through on those gains in November. As of today, GLD and rival gold-backed ETFs were sporting negligible November gains.
Recent consolidation by gold prices and ETFs like GLD could be testing investors’ patience.
“Consolidation creates a test of individuals’ will and more often than not puts the trader in an emotional state, which almost always leads to bad decision-making. This time will not be different; gold traders will lose patience and sell. This will create a buying opportunity for those who understand how to control their emotions,” according to Kitco News.
Much of the near-term thesis for gold revolves around the Fed’s plans for interest rates. The Fed has boosted borrowing costs three times this year and market observers widely expect a fourth rate hike in December. However, President Trump has not been shy about saying he would like to see the Fed slow its pace of rate increases.
Related: Top 34 Gold ETFs
Bullish On Bullion
Some technical indicators auger well for gold, particularly if the yellow metal can remain above $1,200 per ounce over the near-term.
“We are still bullish gold and remain there until gold fails to hold the $1,200 support level. We expect the same price action we saw the last time gold was in this pattern from August through October; gold broke to the upside. We expect the same result here, but will exit below $1,200 if it fails,” according to Kitco.
Gold prices have recently stayed above the mid-August lows and a move close to $1,300 per ounce could trigger more buying. Rising interest rates have also stymied gold this year, but real rates are stabilizing, which could benefit bullion.
For more information on the gold market, visit our gold category.
Tom Lydon’s clients own shares of GLD.