Don't look now, but one large gold exchange-traded fund just did something rare.
As investors were consumed with bitcoin's price action in December, many missed the strong rally in gold. The SPDR Gold Trust ETF (GLD) just snapped its longest winning streak ever. It rallied for 11 straight days before dipping into the red on Wednesday, marking its longest string of positive sessions since its inception in 2004.
Of course, part of the reason for the recent rally is heightened geopolitical concerns, with unrest in Iran and the continuing issues with North Korea.
However, for the first time in a very long time, the expectation that inflation will become more pronounced in 2018 is also giving gold a bid.
Not only have we seen data that show an improving global economy, but more importantly, we are also seeing a rise in commodities. We all know about the rise in oil prices over the past six months, but many other commodities such as copper have jumped as well, and that's worth watching.
The CRB Commodity Index is now testing a very important resistance level: its highs from mid-2016 and early 2017. If that index can break above that line in a meaningful fashion, it will raise the odds that we'll see a kind of rise in inflation that's been absent for many, many years.
I do have to admit that gold and other commodities are getting overbought on a near-term basis, so any "breakout" move may not come immediately. However, if gold and the GLD can break above their 2017 highs of $1,350 and $128, respectively, it would give them both a bullish "higher high" and take the GLD above a "symmetrical triangle" formation. This would bode quite well on a technical basis.
Again, there has been a ton of talk about bitcoin and other cryptocurrencies recently that's said to detract from gold trading. However, if inflation does indeed pick up as we move through the first few months of 2018, it should be quite positive for the "old reliable" inflation hedge: gold.
The GLD looks like it has a lot of potential in the New Year.