There is a very simply rule that traders should follow, when gold is trading higher it is signaling an inflating stock market. The opposite is true when gold is trading lower, it is signaling a deflating stock market. Gold and the major stock indexes are synonymous at this time and will trade in the same direction. Traders and investors should know that gold often leads the stock markets and will usually signal the direction for the major stock indexes.
This morning, the popular SPDR Gold Trust (NYSE:GLD) is declining by 0.85 cents to $173.11 a share. The GLD will have short term intra-day support around the $172.60 area. Should the GLD decline through that support area the next important support area will be around the $171.00 level.
Many of the leading gold mining stocks are coming under some early selling pressure. The Market Vectors Gold Miners ETF (NYSE:GDX), Randgold Resources Limited (NASDAQ:GOLD), Yamana Gold Inc (NYSE:AUY), and Goldcorp Inc (NYSE:GG) are under some early selling pressure to start the day. Traders should watch the U.S. Dollar Index very closely, when the dollar declines intra-day these leading gold mining stocks are likely to catch a bid off of the morning lows.