The big spikes at the beginning of both these charts coincide with the "Washington Agreement", announced by European Central Banks on Sept. 26, 1999. Under that agreement, the ECB and its affiliate European Central Banks promised to limit their Gold sales over the next five years.
That spike topped in October 1999. At the same time, the $A Gold price began an uptrend. For more than a year, between the beginning of 2000 and April 2001, the $A and $US Gold prices were going in opposite directions. The $A Gold price was trending UP - the $US Gold price was trending DOWN.
The $A Gold price temporarily "lost" its lead indicator status for Gold because the Aussie Dollar, even more than most other currencies, was plummeting against the U.S. Dollar. That stopped in April 2001, as did the downtrend on the $US Gold price. Since April 2001 - BOTH the $A and the $US Gold price have been trending up. The difference is that the $A Gold price established its BULL market at the beginning of 2000. The $US Gold price confirmed its bottom in April 2001. Finally, with its $US 7.30 rise on April 25-26, 2002 which breached the $US 310 level, $US Gold confirmed its own BULL market.
Weekly Charts - CLOSING prices
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For the record, here are the (spot future close) Gold highs on this chart:
Like almost everything else in the markets out there, the Gold price is "hovering". In both $US and $A terms, it isn't doing much of anything. The Israeli invasion of Lebanon has died down, the recent UK "terrorist scare" never really got off the ground, and the US occupation of Iraq goes its bloody and soulless way, having now lasted longer than did US participation in the European theatre of World War II.
On August 8, the US got its "rate pause". The rest of the world, including Australia, did not. US (and Australian) stock markets have been trading in very tight (3-4%) trading ranges for over a month. And right now, the Gold price in both $US and $A terms is almost exactly in the middle of its 2006 trading range. It is about $100 below the highs reached in May and about $100 above the level at which it started the year.
The last Gold price tumble came in New York almost in lock step with the UK announcement of the "foiled terrorist plot" on August 10. Perhaps it was not a coincidence that this was on the same day as the Fed announced their first failure to raise official US interest rates since May 2004. Then again ... Since then, the only substantial move in either direction came on Monday, August 21 when the US Gold price spiked $US 13.60.
20 And 40 Week Moving Averages
A little over two weeks ago, just before the announcement of the UK sting operation on the terrorist plot was aired, the Aussie Dollar had climbed above $US 0.77 for the first time since mid May (when Gold was hitting its 2006 highs in $US terms). That was in the first week after the Reserve Bank of Australia raised its rates (by 0.25% to 6.00%) for the first time since March.
As you can see on the chart, the upwards momemtum of the Aussie Dollar against the US Dollar has proved short-lived. In fact, the $A/$US exchange rate, along with just about every other market on earth, has been trading sideways for the past month. This week, the $A lost a mere US 0.25 cents and continued that sideways trip on the chart. The "action" over the last month has pretty well perfectly "straddled" the uptrend line which defines the Aussie Dollar's bull market against the $US.
But the 0.25% rate rise has caused a reaction inside Australia out of all proportion to its size. Consumer confidence has plummeted. That is due, as it is in the US, to unmistakeable evidence that the housing bubble in Australia, long since burst, is starting to wreak havoc. More and more evidence is mounting up of mortgage holders who are now "under water" with amounts owing on their houses which exceed what it would bring if sold.
On Friday, August 26, we received notification from our data supplier that the Australian Stock Market (ASX) had added two new stock indices to their reporting. These are the XGM composed of Aussie metals and mining stocks and the XGD composed of Aussie Gold stocks.
Thus, more than four years after the ASX discontinued the Gold index which it had run since 1985, it has once again seen fit to compile a local "Gold index". We have preliminary data on this new XGD and will be presenting charts as soon as we have had a chance to check the composition of the index.
One thing we have noticed already is that the data we have been supplied with is NOT in the usual OHLC (Open-High-Low-Close) basis but simply the closing level of the index. Unless this is changed, it will not be possible to compile daily bar charts.
We will be researching this new index, the stocks which compose it, and the data supplied as an urgent priority next week. Please stay tuned for updates.
In the meantime, here is the daily (Privateer compiled) XGO bar chart
(Chart appears here in original analysis)