Trading Idea: Is SPDR Gold close to Support?

Published on Tuesday, 08 January 2013 09:28 Written by TradersHuddle Wire

New York, January 8th (TradersHuddle.com) - Shares of SPDR Gold Trust (NYSE:GLD) finished near calculated support at $158.39.

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 range is defined by its calculated support defined at $158.39 and by the resistance level at $169.00.

The area where we expect for buyers to materialize is defined as calculated support. A stock trading near its support level might see a lift, if it provides the necessary support for traders to place their buy orders. However, if this area is breached, it will signal participants that the stock failed to entice buyers to step in and support the stock, which in turn will spur additional downward momentum.

Traders wanting to establish a position should pay close attention to SPDR Gold's price action, and establish it as close to support as possible, but only after buying materializes. Traders should understand that the resistance point at $169.00 might limit their upside, however, if the stock breaks resistance, it could be a good point to step in and add to the position.