GLD: Will This ETF Continue to Come Down?

Gold ETFs SPDR Gold (GLD) didn’t perform well this month so far as it lost more than 4% of its value (up to date). Will GLD continue to come down in the coming days? How will the upcoming FOMC meeting may impact the direction of GLD?

Despite the decline in the price of GLD in the previous week, gold holdings of GLD increased by 0.3% to 788.4 tons of gold. This rally came after gold hoards of GLD fell in the previous couple of weeks. Nonetheless, GLD’s gold holdings are still 1.6% below the levels recorded at the beginning of the year. If the gold holdings keep picking up, this could signal a rise in demand for gold as an investment. What has contributed to the weakness of GLD?

For one, the ongoing recovery of the US dollar seems to have had an adverse impact on GLD.

If the US dollar continues to pull up, this could further bring down GLD. The upcoming FOMC meeting could affect the direction of GLD and US dollar.

This week, the FOMC will convene again for the sixth time.  In the past meeting the reaction to the statement was negative as GLD fell.

This time, the FOMC statement will be accompanied with an economic outlook update and press conference. The main issue to look for in the wording of the statement is whether the FOMC will remove or alter the phrase “considerable time”.

The rest of this analysis is at Seeking Alpha

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