"In this climate, Gold is still groping for but has not yet found a solid support level from which to launch another move upward. We await a spot future close above the $US 330 level as the first solid evidence that such a point is in place."
(The Gold Bull Market - April 18, 2003)
As you can see on both the daily and weekly bar charts to the left, Gold spent almost the entire week trading above the $US 330 level - it certainly closed well above $US 330 every day over the past week. The evidence is growing, but by no means yet conclusive, that Gold's spot future close of $US 321.50 on April 7 might be the low for this correction.
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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In a recession, the name of the game is not to make profits, it is to hold onto capital. The table above is a stark example of how well Gold has performed this task.
In percentage terms, the fall in the $US index since Gold broke through the $US 300 barrier a little over a year ago is still much bigger than the rise in the Gold price over the same period. If Gold's percentage rise had duplicated the percentage fall of the $US index, Gold would now be at $US 353.80.
"The indicator on this chart (the daily bar chart) that a "bottom" to the correction is being established will be when the shorter term MA crosses back above the longer term one, a situation not seen on this chart since February 13."
(The Gold Bull Market - April 18, 2003)
As you can see on the daily chart, the shorter term (10 day) MA HAS crossed back above the longer term (20-day) one, with the Gold price being above both.
On the weekly chart, Gold has bounced off the horizontal dotted line which marks Gold's pre December 2002 high. We have a "gap up" week on the chart, and the price is now back comfortably above the longer-term (40 week) moving average.
On the point and figure chart, Gold has turned up from the $US 321.50 low set on April 7 but has not moved from the $US 334 level it closed at on April 22. We do not yet have a genuine support formation on the chart. The senior uptrend line, anchored back at the April 2001 Gold bottom, is presently at about $US 318 with the immediate support point being the April 7 low.
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.
Looking at the moves since Gold's 2002 low and the $US index 2002 high, you can see that the percentages are much closer. Last week, the $US index was down in percentage terms more than Gold was up. This week, the situation has been reversed, but they are still tracking each other very closely.
The latest US unemployment figures are the worst for some time. The first quarter economic "growth" figure of 1.6% is anaemic and below expectations. Then there is the fantastic plan (reported in our main Gold commentary last week) for the US Treasury to push its borrowings up to a mind boggling $US 12 TRILLION over the next decade.
The technical signals are slowly accumulating. With the Iraq war now over and the "peace" as chaotic as it was always going to be, $US Gold is forming a base for another upmove. Right now, the $US index is only 0.70 points above its 2003 low close of 97.92 set on March 10. Gold is still $US 45.60 below its 2003 spot future high close of $US 379.00 set on February 4. That is in itself a good measure of how "deep" this correction has been.