SPDR Gold (GLD) changed direction and bounced back in the past several days. Will GLD continue to recover? Let’s examine the latest developments in the U.S that may shed some light on the further progress of GLD starting with the U.S equities market.
The U.S equities have taken a beating in the past several days. This may have provided the suitable environment to bring back up GLD. As you can see from the chart below the ratio between the S&P500 index and GLD took a turn in the past several days and fell after it had climbed during August and part of September.
This shift may indicate a short term correction to the rally of U.S equities and fall in GLD. Despite this recent correction, U.S equities are likely to resume their upward trend over the short term. This may steer more investors away from GLD. After all, equities are considered alternative investments to gold and GLD. The recent tumble in equities was partly related to a short term shift in market expectations following the lower global economic outlook as stated by the IMF for the coming years and the concerns FOMC members voiced in the minutes of the last meeting.
The rest of this analysis is at Seeking Alpha