Last week (Feb 10 - 14) spot future Gold fell exactly $US 18.00 - or 4.87%. This week, after hitting a low spot future close of $US 344.20 on Feb 18 (the Comex was closed for Presidents Day on Feb 17), Gold ended the week down precisely ten cents - as you can see on the weekly bar chart. The $US index, while this was going on, ended the week at EXACTLY the same level as it ended the previous week, at 100.25 points
Spot future Gold hit its intraday high so far this year at $US 384.00 on February 5. That was just before the Nymex hiked its margin requirements. Since February 6, total open interest on the Comex has plummeted from 245,680 contracts to a low of 194,980 contracts on February 20 - that's down 20.6%.
Here are the relative performances of $US Gold, the $US Index, and the Dow since Gold broke above $US 300 to stay on March 27, 2002:
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"Between late March and late November 2002, Gold rose a mere 4.83%. Between the end of November 2002 and February 4, 2003, Gold had risen 19.6%. That's a HUGE acceleration. Gold was due for a correction. We now have the first signs that we are going to get one."
(The Gold Bull Market - February 7)
You can see the correction so far on the charts to the left. On the daily bar chart, Gold is bouncing off its shorter-term (10 day) moving average (MA) which has of course crossed below the longer-term (20 day) MA. On the weekly bar chart, Gold has come back close to its shorter-term (20 week) MA, but has then rebounded upward. On the point and figure chart, Gold has come back to about the halfway point in its upchannel - the one that it broke through the top of at the beginning of the month.
The first support point has already been established. It is Gold's $US 342.00 spot future intraday low set on Tuesday, February 18. From there, Gold has rebounded back above the $US 350 level.
If that $US $US 342 support is taken out, the major support points are as follows:
On the weekly bar chart, support lies at the shorter-term MA at about $US 338 and, below that, at the longer-term (40 week) MA at $US 328. On the point and figure chart, support is at the bottom of the upchannel, currently between $US 330-332.
Here's another perspective - a comparison between Gold's 2002 low and its present price and the $US index 2002 high and its present "price". All data is on CLOSING levels:
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You will find charts of the $US index and Gold here for comparison.
As we said here two weeks ago: "Corrections are ever present healthy features of any bull market". The last proper correction we got in $US Gold was back in June-July 2002. After that correction, it took nearly five months - until mid December 2002, for Gold to surpass its June 2002 highs. We don't think it will take that long this time.
As you can see by all the charts above, Gold is firmly "back in the box". That being said, the PRIMARY bull market is still perfectly intact. Right now, almost everything "financial" is on hold as the world waits to see if the US will go to war with Iraq. Meanwhile, in contrast to what happened in the last Gulf War in 1991, Gold has already corrected, before the war has started.