The Gold Trust Rises Higher Heading Into Fed Meeting: Are Investors Leaving Bitcoin For Gold?

SPDR Gold Trust GLD popped up 0.65% at one point Tuesday morning, which created another higher high to confirm the ETF is still trading in an uptrend.

Gold, in the traditional financial system is considered a safe haven during times of economic crisis due to rising inflation. On Wednesday, however, the Federal Reserve will release the minutes from its January meeting where it is expected Fed Chairman Jerome Powell will provide a timetable for when and how much it plans to raise rates this year in order to combat inflation.

Last October, JPMorgan analysts said in a note that it saw Bitcoin replacing gold as a financial asset. Bitcoin was trading just under the $55,000 mark at that time and shot up 25% to reach an all-time high of $69,000 over the month that followed. Since Nov. 10, Bitcoin has lost about 46% of its value, however.

In comparison, the Gold Trust is up about 5% since Oct. 8 but has been volatile, swinging up and down between about $164 and $172.

Traders and investors will be watching the Gold Trust tomorrow to see how the ETF reacts to the Fed’s minutes and Powell’s subsequent press conference. For technical traders, the Gold Trust has clear levels and patterns that will help to indicate the future direction of the ETF.

See Also: Gold Is Outperforming Bitcoin And The Stock Market In The Past 3 Months: What's The Better Hedge?

The Gold Trust Chart: Since reaching a low of $161.80 on Dec. 15, the Gold Trust has been trading in a fairly consistent uptrend on the daily chart. Within the uptrend, the Gold Trust has formed into a rising channel between two ascending parallel lines, which it has tested as both support and resistance multiple times.

A rising channel is considered to be bullish until a security falls through the bottom trendline on the pattern. The channel also has a median line that can often act as support and resistance and on Tuesday the Gold trust tested the median line of the pattern and bounced.

The Gold Trust’s relative strength index (RSI) is still measuring in at a fairly healthy 60% but has been slowly creeping higher as the ETF’s price increases. If the Gold Trust’s RSI reaches the 70% level it may indicate a pull back is needed because at that point the ETF would be technically overbought.

Gold is trading above the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending above the 21-day, both of which are bullish indicators. For short-term traders already in a position a loss of the eight-day EMA can be used as a place to stop out of the trade because the eight-day has been acting as heavy support since Jan. 19.

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• Bulls want to see sustained big bullish volume continue to guide the Gold Trust higher, while keeping in mind the ETF will eventually have to print another higher low in its uptrend. There is resistance above at $174.67 and $176.63.
• Bears want to see a big bearish reaction following the Fed’s decision on Wednesday drop the Gold Trust through the bottom of the rising channel. There is support below the area at $170.75 and $169.33.