The Range Is Tightening in SPDR Gold

Published on Friday, 06 July 2012 08:42 Written by TradersHuddle Wire

New York, July 6th (TradersHuddle.com) - Shares of SPDR Gold Trust (NYSE:GLD) closed the trading session at $155.68 with its price action in a very tight range, given that calculated support is set at $150.15 and the calculated resistance is set at $157.72.

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's stock price action indicates that both sellers and buyers are materializing very close to each other. This signals an area where momentum is building, since the stock can resolve by breaking out of the developing tight range.

Traders wanting to establish a position should pay close attention to SPDR Gold's price action, as any movement outside its predefined range of $150.15 and $157.72 could grasp the attention of momentum buyers that look for a big movement in the price of the stock. Traders need to be aware that tight range resolution works both ways, hence, a move below support could spark above the average selling. A tiered approach could be the best way to start a position; enter into it while the stock is in the tight range, and then add to this position as it breaks and closes above resistance.