Is SPDR Gold Ready for a Break Out?

Published on Thursday, 14 June 2012 08:28 Written by TradersHuddle Wire

New York, June 14th (TradersHuddle.com) - SPDR Gold Trust (NYSE:GLD) closed the trading day at $157.12, near its 50 day and 200 day moving averages set at $156.84 and $163.32 respectively. SPDR Gold's price action placed the stock above the 50 day moving average but below its 200 day moving average, providing a nice trading setup with clear reference points.

SPDR Gold Trust (NYSE:GLD) is an investment trust. The investment objective of the Trust is for the Shares to reflect the performance of the price of gold bullion. The Trust holds gold, and issues SPDR Gold Shares in Baskets, in exchange for deposits of gold and distributes gold in connection with redemptions of Baskets. The sponsor of the Trust is World Gold Trust Services, LLC. BNY Mellon Asset Servicing, a division of The Bank of New York Mellon is the trustee of the Trust. HSBC Bank USA, N.A. serves as the custodian of the its gold.

SPDR Gold seems to be setting up for a tight range between the 50 day moving average as support and the 200 day moving average serving as resistance.

A tiered approach appears to be the best way to maximize possible movements in the stock, as traders could establish a small position in SPDR Gold and wait for the stock to break out above the 200 day moving average at $163.32. Then they could add to the position as momentum builds with the breakout. On the other hand, if support being referenced at the 50 day moving average set at $156.84 breaks, it could signal further downside for SPDR Gold in the horizon.