Friday, August 16, 2013

ShareInv Article: Where Is Gold Heading?

In the last few months, we have been seeing news of hedge fund managers dumping SPDR Gold Trust. Even billionaire hedge fund manager John Paulson, who told investors that they should own gold as recent as last month, cut his own holdings more than half as gold price plunged. Billionaire George Soros and Daniel Loeb are also known to have sold their entire stake on SPDR Gold Share in the past quarter. Will gold price continue to fall from now on?
Chart Of SPDR Gold Share
My view on Gold ETF could be a little bit different from the gurus. Reading the technical chart of SPDR Gold Share, we see that the 10-day and 40-day moving averages work well in indicating the trend of the chart for the past one year. When the 10-day simple moving average (SMA) crosses above the 40-day SMA, it signals to us that the price is going uptrend, and when the 10-day moving average cut below the 40-day moving average, it signals a downtrend.
Since November last year, the SPDR Gold ETF has already been going down trend after the 10-day moving average cut the 40-day moving average; it fell from US$174 to as low as US$114.53. Since early July, we notice that gold price had stopped dropping and started moving higher. We see that the 10-day SMA started to cross above the 40-day SMA, which means that the downtrend has change to an uptrend. Currently, the SPDR Gold Share is facing a strong resistance at US$130. Once this level is broken, we might see further upside on this stock.
For those who worry that the fall will continue, do watch out for the US$122 support and set a stop loss below this level.