SPDR S&P 500 ETF Trust (SPY), PowerShares QQQ Trust, Series 1 (ETF) (QQQ), SPDR Gold Trust (ETF) (GLD) – Market Outlook: Unique Indicator Signals More Gains May Be in Store

Goldman Sachs Group, Inc. (NYSE:GS)’s price targets are probably based on supply-and-demand models, but the chart shows that their target is near a 50% retracement of the price move that began in 1999 and ended in 2011.

India’s economic slump was one reason for bearishness cited by Goldman. India is the largest consumer of gold. Although gold prices are lower after the rupee declined, economic growth is slowing in India and that could hurt consumer spending. A lack of buyers in the largest market would hold down the price of gold.

One piece of data that shows how deep the slowdown could be is the latest GDP forecast for India. Government officials recently cut their forecast for growth in GDP to 5.3% from 6.4%. Growth in India averaged 8% a year in the last 10 years.

Gold appears to be inexpensive when compared to the prices seen two years ago, but with demand down, prices are unlikely to stage a significant rally. Gold remains a market that traders should avoid.

This Week’s News

The Federal Reserve holds a two-day meeting this week on Tuesday and Wednesday. Expect trading to be subdued until Wednesday when the Fed releases its statement. Then look for volatility into the end of the week.

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