On April 2, spot future Comex Gold hit an intraday low of $US 255.00 and closed at $US 255.60. As you can see on the bar charts on the left, it has been steadily rising ever since. This is the sixth week in a row that spot future Gold has gained on a weekly basis. And as you can see on the weekly bar chart, the spot price has managed to close above its longer term (40-week) moving average this week - for the first time since mid 2000.
It is true that the rise has not been very exciting, although the $US 4.90 gain (to $US 270.40) on May 9 was the biggest one day rise in two months. It is also true that a substantial part of that gain was due to short covering. The open interest (on all maturities) on May 9 fell below 110000 for the first time since March 1993.
March 1993 was, of course, the start of the the last Gold bull market, during which Gold rose from $US 325 to $US 408 in five months. We haven't seen anything like that rise since. Nor are we now seeing anything like it now. What we have got is an almost assured bottom, and a steadily increasing improvement on the charts.
Gold lease rates on the short end have been slowly falling. The other item of note is that the "backwardisation" on the rates (short-term above long-term) has disappeared. On the paper asset markets, Treasury yields are soaring, especially in the middle of the curve with 1 and 2 year paper. It would seem that there is a growing expectation of higher prices to come.
Spot future Gold closed 2000 on December 29 at $US 273.60. It then fell $US 3.60 on January 2 to open 2001 at $US 270.00. The next day, the Fed sprung the first of its rate cuts on the world. The highest Gold has been since Jan 2 was $US 272.30 reached on March 12. On May 9, Gold closed above $US 270 again - at $US 270.40.
Any spot future close above $US 272.30 would be a high for the year. Any close above $US 273.60 would put Gold in the "black" for the year. But the big one would be any spot future close over $US 275. Take a look at the long-term $US 5 x 3 P&F Gold chart. That chart has not moved since February 10, 2001. A close of $US 275 or higher would turn it up, and be the best and probably final piece of evidence necessary to conclude that Gold has indeed bottomed.
This Tuesday (May 15), the Bank of England holds another Gold auction. Unlike all the previous auctions - stretching back to July 1999 - this one is for 20 Tonnes (643,086 troy oz) rather than the 25 Tonnes (803,858 troy oz) sold at all previous auctions. On the same day in the U.S., the FOMC meets to deliver what everyone expects to be the FIFTH U.S. rate cut this year.
The U.S. Dollar is STILL rising, for how much longer it is impossible to tell. As you may have noticed, the Euro actually FELL after the ECB cut rates (by 0.25%) on May 10. It is only a matter of time before the same thing happens to the Dollar. Meanwhile, Gold continues to improve slowly but surely.