Chart of the Day: Gold Is in a Consolidation Period
A pullback is healthy as long as the long-term support holds.
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Gold is going through it's typical summer corrective phase. After a strong move up in the spring it is time for the SPDR Gold Trust GLD to do some "soul searching" and find a price level where buyers and sellers agree. That level could be current or a bit lower.
Gold is suffering from the same thing that is plaguing small cap stocks — lack of interest and lower rates. That may seem curious, but it makes sense due to the fact inflation is starting to recede. Remember, gold is a great hedge against inflation and weaker currencies.
The recent low around the $215 level appears that it might stick. Stochastics momentum is starting to rise, and while money flow is poor it is also looking to make a bottom. Moving Average Convergence Divergence (MACD) is still on a sell signal but it too is trying to make a turn.
Let's see if GLD can show some sideways movement here over the next few week. It could be ready for a move up. Hence, this might be a good place to add some shares.
We rate GLD a Two in TheStreet Pro Portfolio.
At the time of publication, TheStreet Pro Portfolio was long GLD.
