After the commencement of war selloff pushed Gold down to $US 326.10 last week, this week has seen an "up week" for Gold and snapped a sequence over the two weeks from March 10 to March 21 during which the spot future Gold price slumped $US 28.70 or 8.1%. According to many "analyses" of Gold, it was this slump which has washed out the "war premium" which was supposedly built into the Gold price.
The last $US 6.90 of Gold's fall which took place on March 21 and pushed the spot future price down to $US 326.10, was perfectly coordinated with the beginning of the "shock and awe attacks" on Baghdad. This pushed Gold below its 200 day moving average (MA). While Gold has now regained that 200 day moving average, it has not yet regained the $US 333 level, where it stood on the day before the "shock and awe" attacks began. This week, Gold is actually up $US $US 5.40.
You can see this regaining of the 200 day (40 week) MA on the weekly bar chart to the left, and on longer-term weekly bar chart (chart opens in separate window)
At its close of $US 331.50 on March 28, Gold is now back to its levels of early December 2002.
Here are the relative performances of $US Gold, the $US Index, and the Dow since Gold broke above $US 300 to stay one year ago - on March 27, 2002:
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The daily bar chart shows the entire Gold "correction" since its 2003 high set on February 4 in bold relief. It also shows the inability of the shorter term (10 day) MA to cross back above the longer term (20 day) MA throughout that period. The weekly bar chart shows that Gold is being supported by its 200 day moving average, and by what was its ceiling throughout almost all of 2002 - the horizontal dotted line. On the point and figure chart, what looked like a head and shoulders formation has become a head and shoulders formation with a vengeance. 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. On this chart, Gold has simply turned up but has yet to establish solid support.
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.
"By all the measures on the tables above, and on all the charts, Gold is HUGELY "oversold". Nonetheless, it remains comfortably above the bottom of its post April 2001 upchannel - see the point and figure chart above. We are still waiting for support. The 200 day moving average is a good candidate."
(The Gold Bull Market - March 21)
The 200 day moving average is providing support. The initial euphoria on stock and currency markets is now over, the Dollar especially having suffered this week, down 2.10 on the $US index. The longer the war drags on, the more difficult it becomes for the powers that be to pretend that all is business as usual - either on Wall Street or in the Pentagon.
By all the measures on the tables above, and on all the charts, Gold is HUGELY "oversold". Nonetheless, it remains comfortably above the bottom of its post April 2001 upchannel. As long as this channel remains intact, so does the Gold bull market.