On Friday, yes, Gold definitely lost its shine. On Friday we say the best ever month for job creation as 2.5 million jobs were added to the economy. It was the best month for job growth since the Bureau of Labor Statistics started tracking the data in 1939. While equity markets in the US rallied more than 2%, Gold fell almost $40 and ended the week almost 4% lower.
However, something is happen behind the scenes. According to the World Gold Council, year to date as of May, gold-backed ETFs saw inflows of $33.7 billion with the inflow in dollar terms topping the highest level of annual inflows of $24 billion seen in 2016. And the year isn't even over yet.
Led by the SPDR Gold Shares (NYSE: GLD), the category's big kahuna, gold exchange-traded funds are on torrid asset-gathering paces this year.
“Continuing their growth streak, gold-backed ETFs (gold ETFs) added 154 tonnes (t) – net inflows of US$8.5bn (+4.3%) across all regions in May, boosting global holdings to a new all-time high of 3,510t,” according to the World Gold Council. “Year-to-date, inflows (623t, US$33.7bn) now exceed the highest level of annual inflows (591t) seen in 2009.”
Year to date, investors have added $12.95 billion to GLD, the largest bullion-backed ETF in the world. Only two other ETFs have seen larger inflows.
Now before we get into GLD, lets gold at gold charts themselves on a platform I used to trade futures. The yellow shaded areas represent monthly supply and demand. In April, price nearly breached the monthly supply zone, but because this is a major zone, the buyers and the sellers have been battling it out for months.
The next chart is a weekly chart. Now if you are a day trader or short term investor, the $40 drop in price on Friday might be freaking you out. But if you take a step back, price has just been range bound and has now fallen back to the bottom of the range.
Now, on the daily chart, what we see is previous resistance and now serving as support.
So if you are asking me where can I get long, on the 4 hr chart is a demand zone, that I talked about on one of the Leo Podcast that I would certain go long...which is the $1645 level.
How does all this translate to GLD? Ideally, I would have loved for price to have broken the monthly supply, before making its way to the daily demand at $155. But I think if you have a longer term view, the $155 level would be a place I would go long at.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
