Spot gold pulled back again today as the dollar hovered higher. The SPDR Gold Trust (NYSE:GLD) has now fallen into a key support at $109.00. Not only is this a necktie between the 50 moving average and the 20 moving average, but if you connect the recent daily lows (as seen below), there is a key trend line support. While this support looks amazing in many respects, be very cautious. A move below that support and the GLD could and most likely will see a tumble to the recent lows of $102.00.
Gold stocks like Yamana Gold Inc. (NYSE:AUY) continue to hover just off support as well. This stock looks to have good support around $10.00. However, should it fail to hold, a sharp down move would be expected. While AUY has been weak of late, Newmont Mining Corporation (NYSE:NEM) has been a powerhouse. This stock has soared from the range of $43.00 all the way to a recent high of over $52.00. In recent days it has pulled back to the $51.00 area. Keep a close eye on NEM as it does still look a little near term extended. Should the GLD break that key level, this could have a significant fall to it.
Please note that everything comes back to that key level on the GLD. Should the GLD hold the master $109.00 level, gold stocks should continue to do well in the coming weeks. However, should the GLD break, watch out below not only on gold, but on many of these miners. The dollar continues to show decent strength today. Gold moves the opposite way of the dollar. In addition, gold tends to move higher if panic sets in on the markets. I will continue to update you on gold.
Chief Market Strategist
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