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

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Today, we’re opening a new bullish trade on the SPDR Gold Trust (GLD). The reaction we saw in the financial markets in the aftermath of the Federal Open Market Committee (FOMC) monetary-policy statement release tells us that the uncertainty that has been plaguing investors for the past two years is very much alive and well.

Typically, when you see a more “hawkish” statement from the FOMC, the value of the U.S. dollar (USD) rises and the value of gold drops as investors prepare for higher interest rates and a stronger USD in the future. Interestingly, we saw the exact opposite yesterday. The USD fell and gold prices rose as longer-term interest rates dropped — with the yield on the 10-year U.S. Treasury dropping back down to 1.5%. This tells us that investors have little confidence an interest-rate hike by the FOMC is in any way a sign that the global economy is recovering.

This economic uncertainty is a bullish catalyst for gold prices. GLD bounced up off of support near $125, and we anticipate that the fund is going to continue climbing back up to its recent highs around $130.

Buy to open the GLD September 130 Calls (GLD160916C00130000).

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Article printed from InvestorPlace Media, https://investorplace.com/2016/07/trade-day-spdr-gold-trust-etf-nysearca-gld-2/.

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