Trade of the Day: SPDR Gold Trust ETF (GLD)

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Gold’s continued closes below $1,100 last week were very bearish developments. Friday’s low for gold reached $1,072, and the near-term chart for gold looks scary, with a test to $1,000 being nearly a given as long as $1,100 holds as resistance. At current levels, this would suggest another 10% pullback in the yellow metal. The major moving averages are curling lower and show no signs of leveling out over the near term.

The longer-term 10-year chart looks more terrifying, as gold could test $900-$800 on a break below $1,000.

I have been warning my Momentum Options subscribers about the breakdown in gold all month and I continue to monitor the SPDR Gold Trust ETF (GLD). GLD traded to a fresh 52-week low of $103.43 on Friday and looks poised to test the low $90s on a continued pullback.

If GLD falls below $103.50 this week, I am inclined to pull the trigger and open a position in the the GLD Aug. 21st $100 puts (GLD150821P00100000) for a short-term trade. They are currently trading around 60 cents.  The GLD Sept. 19th $98 puts (GLD150918P00098000), trading around 85 cents, could also be used to buy more time.

Conservative traders could get positioned now for a bearish move in gold, while more speculative traders looking for a bargain could wait a few days, as the aforementioned GLD chart shows risk to $106-$108 over the near term, so these options could get cheaper. Once positioned, look to take profits as gold prices falter and GLD drops into the $90s.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/07/trade-of-the-day-spdr-gold-trust-etf-gld/.

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