Gold Surging after FOMC Statement

The price of gold surged today after the FOMC announced it would keep interest rates near historical lows into 2014. The policy can be viewed as another round of quantitative easing by some. PIMCO's Bill Gross referred to the move as QE 2.5.

Whatever you make of it, the more important point is that the market liked the comments as did investors in precious metals. Gold rallied back to the $1700 area and the SPDR Gold ETF ($GLD) surged to the best level in over a month - up over 2%.

The gold ETF continues to be my largest holding for clients and as I stated when the metal pulled back in December - Do not give up on it! And thankfully I did not and hopefully you did not either.

There may be a bit of resistance for $GLD at the $165.50 area, which is the top of the gap formed in December, but longer term I like the ETF to retest the high of $185/share.

Must-See Chart of Gold ETF - $GLD

The chart above is of the SPDR Gold ETF ($GLD), which has fallen by 12.6% in the last 5 weeks and is down 10% in the last 12 days. A sudden panic has taken a hold of gold as news and rumors swirl about the yellow metal.

A few of the factors moving gold lower: a higher US Dollar, rumors Paulson is selling gold in his large hedge fund, rumors of maneuvering by Central Banks around the globe, and the risk-on trade is not off and hurting hold and forcing many investors that were leveraged to sell.

Technically $GLD fell through important support at the $161 area and fell right down to the next and even more important support zone of $151 - $154.50. This area is highlighted by the two horizontal black lines on the chart. The ETF closed today at $152.88, still in the range.

So far, I am still on the side of gold, BUT I will watch the next 2 days very very close.