Here’s why the gold GLD ETF just hit a monthly high

About two weeks ago, SPDR Gold Trust (GLD ETF) momentarily dropped below the crucial support zone of $300 amid heightened optimism over relations between the US and its trade partners. Even so, it has remained on an uptrend as gold price holds steady above $3,000 an ounce for close to a month now. 

While the precious metal is about $140 below the all-time high it hit in late April, it has rallied by more than 25% year-to-date. Central bank buying and safe haven demand are the key factors that have sustained gold price upward momentum in recent months.

The precious metal’s safe-haven demand has particularly surged in recent sessions amid fresh geopolitical tensions and concerns over Trump’s trade policies. In the ensuing sessions, US economic data and risk appetite are set to shape gold price movements. 

Fresh fears heighten gold safe-haven appeal

On Monday, GLD gold ETF rose to a one-month high as fresh trade and geopolitical tensions heightened gold’s safe haven appeal. This follows a series of drone strikes by Ukrainian forces across Russian territory on Sunday. The dramatic attacks hit airfields as far as eastern Siberia in its largest long-range attack on Russia. Russia has termed the strikes, which took one-and-a-half years to organize, as a “terrorist act”.

A day after the attacks, peace talks between the two parties, which were held in Turkey, stalled. Ukraine has accused Russia of undermining the negotiations by rejecting an “unconditional ceasefire”. However, they both agreed to swap sick prisoners and those below 25 years of age.

In addition to the fresh geopolitical tensions, GLD gold ETF and the broader gold market are benefiting from President Trump’s latest assertions that he will increase steel and aluminum import tariffs from 25% to 50%. He made the remarks while visiting a Unites States Steel Corp. plant, terming the move as one that would benefit America’s steelworkers.

In response, Canada through its industry minister warned that it would retaliate should Trump make true his warnings. Besides, investors are concerned that the progress made in US-China trade deal may be reversed. This is after Trump accused Beijing of violating their agreement. Notably, trade tensions between the two major economies had gold price recording multiple all-time highs in recent months to a record-high of $3,500 in April.  

Risk appetite, US economic data to shape gold price movement

In the ensuing sessions, gold price movement will remain subject to the overall mood in the financial markets. Uncertainties over Trump’s trade policy and the overall trajectory of the US economy will likely bolster the bullion’s price further to a fresh one-month high.  

Weaker-than-expected job data may weigh on the US dollar while bolstering GLD gold ETF. At the same time, it would increase the odds of a Fed rate cut during the July meeting. Analysts expect nonfarm payrolls to come in at 130,000, down from the previous month’s 177,000. At the same time, the unemployment rate is forecast to remain unchanged for the third consecutive month at 4.2%.

GLD Gold ETF Technical Analysis

GLD gold ETF remains on an uptrend, trading above the short and medium-term EMAs. A look at its relative strength index (RSI) further points to a steady upward momentum in the near term.

At its current RSI of 58.50, and based on the fundamentals, the gold derivative will likely rally further to hit an RSI of 62. Even with a pullback, I expect it to remain above the average zone with 52 offering a steady support zone.  

With that, the range between $302 and $315 is worth watching. A corrective pullback would have the bulls defending the 50-day EMA at $296.