Gold is doing exactly what it should be doing right now—pulling back just enough to shake out the fast money before setting up its next leg higher. And if you’ve been following the SPDR Gold Trust (GLD) since our last update, you know we called this one.
We flagged the overbought setup and told readers to expect a healthy correction. Fast forward to today: GLD is down about 7%, sitting right on its 20-day moving average. That’s textbook trend behavior. The setup here is classic—and bullish.
This week’s GDP report showed the U.S. economy contracting by 0.3%—the first negative reading since 2022. That surprise headline immediately fueled speculation that the Fed might shift toward cutting interest rates, a move many investors have been anxiously waiting for.
Here’s the issue: Fed rate cuts during economic contractions aren’t bullish—they’re triage. Historically, when the Fed cuts in response to a shrinking economy, stocks often remain volatile, and recession risks don’t magically disappear. They get amplified.
At the same time, this week’s earnings calls echoed one loud theme: uncertainty. From CEOs to CFOs, we heard the same thing—loss of visibility. Tariffs, slowing demand, and economic weakness are clouding outlooks across every sector.
Add in declining consumer and investor confidence, and the picture becomes clear: volatility isn’t going anywhere.
Just as the market began pricing in a possible Fed pivot, this morning’s jobs report changed the story again. Hiring came in far stronger than expected, leaving Fed Chair Jerome Powell in a bind.
His mandate is to balance employment with price stability. Inflation hasn’t disappeared, and now he must contend with an unexpectedly strong labor market while GDP contracts. That’s a tough hand to play.
This indecision adds to the case for gold. Why? Because indecision equals volatility—and gold thrives on volatility.
Don’t overlook the currency angle. After a short-term bounce, the U.S. Dollar Index is rolling over again. That’s bullish for gold and silver, which are priced in dollars and tend to rally when the greenback weakens.
A falling dollar boosts demand for hard, non-dollar-denominated assets. That includes GLD, silver ETFs, and even physical bullion.
Since our last update, GLD has pulled back about 7%—right into a key support zone we outlined: the 20-day moving average.
Here’s why this is important:
If GLD drops further, we’ve outlined a deeper support zone at $285–$290. That would be a gift of a pullback.
Here’s where it gets even more bullish: GLD’s 50-day moving average is still in a strong uptrend.
That tells us one thing—the long-term trend hasn’t broken. In fact, it’s intact and guiding higher.
Historically, when gold holds above its 50-day moving average during a pullback, the next move is usually a new high—especially if volatility is rising.
Let’s talk VIX.
The CBOE Volatility Index ($VIX) has been hovering around 25 for the past week—even as stocks attempted a bounce. That’s not normal. When stocks rally, the VIX usually falls. Not this time.
That divergence means big money still expects turbulence.
And if there’s one thing we’ve learned from the last five years, it’s this: gold loves a volatility spike. It’s the go-to play when the market throws a tantrum.
Here’s the setup, plain and simple:
This is one of the only clean trends in the market right now. Gold has held up better than tech, energy, or even Treasuries during this past wave of uncertainty.
The technicals haven’t broken. The 50-day moving average remains in a solid bullish trend. Momentum is still in place. And the macro backdrop—from Fed policy chaos to a weakening dollar—continues to favor hard assets like gold.
This is what a healthy correction looks like. GLD is recharging for its next breakout—and those who missed the first leg now have a second chance.
