During January the GLD exchange traded fund experienced the largest monthly increase in its gold holdings since summer 2012:
The August/September 2012 GLD inflows had a lot to do with the Federal Reserve’s ‘QE3’ announcement which occurred on September 13th, 2012. Much in the same way the recent GLD inflows probably have a lot do with the ECB’s quantitative easing announcement on January 22nd.
We have been highlighting the summer 2012 analog in gold for the last month and the price action in both gold and gold stocks have continued to track the analog closely; if the analog is to continue we should see a higher high (above $1307) in gold over the next 1-2 weeks before a large downdraft takes place (5%+).
From my perch I am less concerned about the analog at this point, and a breakout back above $1307 would offer a strong indication of a significant trend change:
Gold is currently facing an important test of the long term trend – a weekly close above $1300 would be highly significant.