Haven't the rumours been flying on the Comex over the past month or so? Actually, Gold got started on its present downswing on a fact. It was announced during the last week of February that "a European Central Bank" had sold 30 tonnes of Gold. So it had, during the previous week, the Bank of Portugal HAD sold 30 tonnes of Gold, as mandated under the 1999 "Washington Agreement. No matter, Gold fell.
After that, though, facts, however innocuous, were no longer deemed able to provide sufficient downward impetus to Gold, so the rumours started. In the first week of March, it was the capture/wounding of two of Osama Bin Laden's sons. In the second week of March, it was the possible "surrender" of various Iraqi Generals, this feat to be accomplished without a shot having been fired. Gold fell some more. Both rumours were strenuously denied by the Bush Administration within hours of having been spread, but no matter, mission accomplished.
At its close of $US 336.60 on March 14, Gold is now back to its levels of mid December 2002.
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:
|
"For the first time since Gold began its big run up at the end of November 2002, the percentage fall of the $US since Gold broke definitively through $US 300 almost a year ago is bigger than the percentage $US Gold price rise over the same period."
(The Gold Bull Market - March 7)
That was last week. This week, the anomaly has become much bigger. The word "oversold" in regard to Gold comes to mind, but don't forget that Gold, unlike most other financial investments, is something that the financial powers that be WANT to be sold, not bought.
On the daily bar chart, Gold is now well below both 10 and 20 day moving averages. A good indicator that this correction has found bottom will come when the shorter term average moves back firmly above the longer term one. On the weekly bar chart, Gold has broken decisively below its three week trading range and is now below its shorter-term (20 week) MA for the first time since last November. The longer-term (40 week) moving average is just below the $US 330 level. On the point and figure chart, what looked like a head and shoulders formation has become a head and shoulders formation. Gold has trespassed just below the first of its uptrend lines. The senior uptrend line, anchored back at the April 2001 Gold bottom, is presently at about $US 318.
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:
|
You will find charts of the $US index and Gold here for comparison.
"If there was ever going to be a time when all efforts were bent to keeping the Gold price under control, it was always going to be on the brink of the war with Iraq breaking out. We are now very close to that brink, and as the charts on this page show, Gold is back firmly under control. So are US government bond rates and so is the Dollar. For now."
(The Gold Bull Market This Week - February 28)
The Dollar looked like it was spiralling down out of control this week when the $US index closed at a new 2003 low of 97.29 on March 10. But the rumour about the "surrender" of the Iraqi generals did more than just knock Gold down, it pushed the Dollar (and US stock markets) up. By the end of the week, the $US index had regained the 100 level for the first time since February 21.
Gold is now right at the bottom of its post December 2001 upchannel. It remains comfortably above the bottom of its post April 2001 upchannel - see the point and figure chart above. Now, we have to wait to see where Gold finds support.