With diminishing hopes that the precious metals market will recover, investors are awaiting the Fed’s meeting on December 16, 2015. ETFs that take their price movements from precious metals may also be significantly impacted.
Gold hit a six-year low in November, and the SPDR Gold Shares (GLD) fell at the same time. GLD has fallen about 6.8% in the month of November. It’s the biggest monthly fall for GLD since 2013. Hedge fund investors remain bearish on gold and thus bearish on GLD as well.
The only big investor that remains bullish on gold is John Paulson. He currently owns 9.2 million shares of GLD. GLD shares have fallen almost 10% in the current year. The fund also saw a fourth consecutive week of the short position increasing.
GLD shares are currently trading at $101–$103 per share. It settled at $102.30 per share on Tuesday, December 1, 2015. It’s trading at nearly a 4.7% discount to its 100-day moving average price of $107.40 per share.
Gold’s RSI (Relative Strength Index), which measures the undervaluation or overvaluation of the asset, is at 30.2 points. A figure of 30 indicates that GLD is undervalued and investors can expect an upward reversion of prices. However, a likely rate hike by the Fed would suggest otherwise.
Some other mining companies that may also be affected by the Fed’s decision include Eldorado Gold (EGO), Alacer Gold (ASR), Iamgold (IAG), and Coeur Mining (CDE). These four companies together determine 6.3% of the price changes in the VanEck Vectors Gold Miners ETF (GDX).