The month of May was actually the best month for Gold so far this year. Over the month, Gold rose $US 25.10 or 7.40% from $US 339.40 to $US 364.50. That is better in both nominal and percentage terms than Gold's rise in January - up $US 20.10 or 5.77% from $US 348.20 to $US 368.30. Admittedly, in January Gold was rising to levels not seen for five years while in May Gold was simply retracing the ground lost in February, March, and April.
So far in June, Gold is down $US 0.80, having closed on June 6 down $US 4.90 to $US 363.70. The range for June, however, has been far greater, from a spot future intraday low of $US 360.00 on June 2 to an intraday high $US 370.00 on June 5.
As it has been doing regularly, the $US index hit yet another new 2003 low this week, closing down 1.20 to 92.59 on June 5 (while Gold was rising $US 6.00). On June 6, the $US index rebounded 0.97 to close the week at 93.56 (while Gold was falling $US 4.90). June 5 was, of course, the day that the European Central Bank (ECB) chose to lower European interest rates by 0.50% to 2.0%, thereby taking the pressure off the Fed and making it far more likely that the Fed will cut when they meet on June 24-25.
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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Gold's gain is once again lagging behind the Dollar's loss in the period since late March 2002 shown above. The resistance on the point and figure chart and on the longer-term weekly bar chart is holding with Gold having been bouncing off the top of its upchannel for the past three weeks.
On the daily chart, Gold has spent the week trading between its shorter term (10 day) moving average (MA) and its long term (20 day) MA as the resistance from the top of its upchannel bites.
The weekly bar chart and the point and figure chart both show the solid resistance Gold is encountering at or about the $US 370 level. Gold has now been trading between the low $US 360s and the low $US 370s for the past three weeks.
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.
At the G-8 meeting last weekend, President Bush affirmed that the US had a "strong Dollar policy" but that the Dollar's exchange rates would be determined by the market. We have been hearing variations on this theme from a succession of Presidents and Treasury Secretaries ever since the world's currencies "floated" 30 years ago. That "stabilised" the Dollar until the Europeans cut rates and the $US index fell to yet another 2003 low. Behind the scenes, the pressure on the Europeans was undoubtedly immense, and they came to the party with their rate cut on June 5.
With the Japanese, the US, and now the Europeans having now joined in the "fight against deflation", the last thing that any of them want is to have their schemes exposed by a rampant Gold price. Nobody, not even Alan Greenspan, could sell the prospect of deflation in the face of a soaring Gold price.
But for the present, world paper markets have been reassured that NOBODY (at least nobody who matters) is going to be raising interest rates for the foreseeable future. That has been enough to keep stock markets improving and to keep the US bond and real estate bubbles intact. In fact, in the face of all this, Gold is hanging in there very well indeed.