SPDR Gold Trust (GLD) ETF nears a key price as US debt hits $33T

By:
on Sep 19, 2023
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  • The SPDR Gold Trust ETF has formed a symmetrical triangle pattern.
  • The focus shifts to the upcoming Federal Reserve interest rate decision.
  • Several countries like China are aggressively buying gold.

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The SPDR Gold Trust (GLD) ETF price jumped by more than 0.60% on Monday as traders repositioned for the upcoming Federal Reserve decision. The stock was trading at $180, a few points above last week. 

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Federal Reserve decision ahead

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The SPDR Gold Trust is the biggest gold-focused ETF in the world. According to its website, the fund holds over 880 tons of gold, which are valued at more than $54.4 billion. 

The fund offers the best approach for investors to allocate funds to gold without taking physical deliveries. As such, since its holdings are in gold, the price reacts to the daily movements of the metal.

Gold is reacting to several macro events. First, there is an ongoing de-dollarization trend, where countries like China, Saudi Arabia, and Russia are reducing their exposure to the greenback. Saudi Arabia and China have cut their US Treasury holdings to their lowest level in years.

These countries are reacting to the decision by the US government to sanction the Russian central bank at the onset of the war in Ukraine. At the same time, they are reacting to the soaring US debt. The most recent data shows that public debt topped $3 trillion on Monday and analysts believe that the trend will continue. 

I suspect that the debt will rise to over $50 trillion in the next few years. As such, there are concerns about whether the US will be able to pay back its debt in the future as interest rates rise.

The next important catalyst for the SPDR Gold Shares Trust will be the Fed decision. Economists believe that the Fed will decide to leave interest rates unchanged in the coming meeting. 

A key risk for gold is that the US dollar index (DXY) has surged to the highest level in years. Some investors have turned to liquid US dollar money market funds (MMF), which are yielding over 5.50%.

GLD ETF stock price forecast

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SPDR Gold Trust

The SPDR Gold Trust has been in a tight range in the past few months. It slipped from the year-to-date high of $191.06 in May to the current $180. The fund has formed a symmetrical triangle pattern shown in black. It is also oscillating at the 25-day and 50-day moving averages.

Most importantly, the triangle pattern is nearing its confluence level, meaning that a breakout or breakdown is about to happen. Therefore, the key support and resistance levels to watch will be at $174.80 (August 21st low) and $191.06 (YTD high).

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