In a sell-off that has now reached historic levels, venerable gold-focused exchange traded fund SPDR Gold Trust ETF (NYSE:GLD) today closed in negative territory for a record-tying ninth straight session.
Pension Partners analyst Charlie Bilello pointed out GLD’s nasty streak today on Twitter:
— Charlie Bilello, CMT (@MktOutperform) October 6, 2016
Amid the now nine-session losing streak, GLD has lost $7.99, or 6.26%. Trading volume in the fund has intensified in recent days, with the past three sessions registering 24.3 million, 14.6 million, and 17.9 million shares changing hands, respectively, compared with an average daily volume around 10 million shares.
Given the steep sell-off, GLD is quickly approaching what many would consider “oversold” territory. Charlie Bilello writes:
Gold is currently “oversold.” Its 14-period RSI (a technical indicator that can range from 0 to 100, where 0 is maximum oversold and 100 is maximum overbought) is at 27.83. Going back to 1972 (first year off the Gold Standard), this reading is lower than 97% of daily readings. So that’s pretty extreme in a historical context.
What this means for gold is anyone’s guess, but historically speaking, a bounce is more likely than a continued pullback:
The best we can say in observing Gold in an extremely oversold state is that it tends to rise on average over the next year and if it’s in an uptrend (as it is today) it tends to rise more than other periods.
That’s not much consolation to GLD investors, but as they say, tomorrow is another day.
GLD closed at $119.66 today, down $1.12 (-0.93%). Year-to-date, GLD has still gained 17.94%, but has fallen nearly 9% from its yearly highs set back in early July.