About three weeks ago, I wrote about gold, specifically, the SPDR Gold Trust, GLD, where I referenced one of last year’s best-performing hedge funds was saying to buy gold as the “trade of the century.”
But I cautioned to wait because the chart was suggesting to wait until price broke the monthly supply first…and with good reasons based on an article I came across today.
A week ago investors were yanking money out of gold exchange-traded funds as hints of improving global growth and surging stocks lure them into riskier assets. The largest fund in the space, the $32 billion SPDR Gold Shares fund, or GLD, lost more than $671 million of assets this week.
“The precious metal has been out of luck as investors are interested in buying riskier assets than parking their money in safe-haven assets,” Naeem Aslam, chief market analyst at ThinkMarkets, wrote in a note Wednesday. “The reality is that everyone is looking at the quarterly performance of equity markets and they are feeling FOMO.”
Concerns about a deep slowdown in global growth receded over the last week and buoyed risk assets amid a smattering of positive economic data. There have been signs China’s economy is stabilizing, and the outlook for Europe got a boost Wednesday from better-than-expected services data.
Investors are now looking toward a resolution to ongoing trade talks between the U.S. and China, which could provide another catalyst to sustain the rally in equities.
The volatility we have seen the last 16 months has forced many investors/traders not be married to trades. Gold is no different. Gold was the it thing in the Fall, but has fallen out of favor since the beginning of the year as money move from risk off to risk on assets. But due to recent events or should I say tweets,
we might be back to a risk off environment again. However, this might be evident on the chart. Three weeks ago I highlighted a weekly demand zone. Last week, it was hit and price is bouncing off the zone presently.
But I think the real money will be made when price can breach the monthly supply at $129.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.