The fact that Gold hardly moved in $US terms this week, being down $US 0.10 on the week, is NOT insignificant given the performance of the US Dollar. Measured by the $US index, the Dollar had its best week in more than two years this week as the index gained 2.2 points or 2.3% to close the week at a four month high of 99.00.
Given this rise for the $US index, Gold did very well in terms of all other major currencies this week. And given the fact that by far the biggest single component of the $US index is the Euro, Gold did especially well in Euro terms.
In the US, the economic recovery is underway and no increase in official rates is necessary because "inflation" is low. This is said while Treasury two-year rates hit new 2003 highs this week and while the Treasury reports that its official "debt to the penny" is now up by $US 558 Billion so far this fiscal year. So far, no matter. The Dollar is up, the stock markets are up, even the lights are back on.
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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If you doubt that Gold's breaking back above the $US 300 barrier to stay in March 2002 was a "sea change" for world markets, a glance at the percentages in this table should settle the matter beyond all reasonable doubt.
As you can see on the daily bar chart, Gold has been all over the map this week. The most startling performance was the "gap up" day on Wednesday, August 20, the day that the suicide bombs went off in Iraq and in Israel. Volume has become somewhat more subdued but open interest on the Comex is still rising and the "commercials" are again adding to their short positions.
On the weekly bar chart, you can see that Gold is once more batting its head against resistance - the dotted red line on the chart. The uptrend remains perfectly intact, of course, and the shorter-term moving average remains above the longer-term one. On the longer-term chart, you can see that Gold is right in the middle of its post December 2001 uptrend.
The point and figure chart has been compressed into a very tight trading range. This range will be broken to the upside on any close above $US 367 and to the downside on any close below $US 358. This chart CANNOT keep on going sideways so Gold must break one way or the other.
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.
Many mainstream financial websites have commented on Gold's resilience in the face of the HUGE upmove on the US Dollar this week. Nearly as many have commented on the new multi year highs set by Gold stocks in the US and elsewhere. Right now, "everything" in the US - stock markets, bond yields, currency, and gold - are going up together. That can't last.
There is one more week left in the northern summer. This year, Labor Day falls on September 1. So far, the financial powers that be have talked up a very good "second half" rally, aided and abetted, perversely enough, by the huge spike in market interest rates since Mid June. Everyone is scrambling to borrow NOW, before rates choke them off.
So far this year, the performance of Gold in $US terms has been very subdued. It started 2003 at $US 348.20. It is now at $US 363.10 - up $US 14.90 or 4.3% on the year. The main factor keeping Gold subdued has been the $US rally since its June 2003 lows. Since in reality, the factors which forced the $US to those June lows have not improved but have become worse, the $US rally is living on borrowed time. So is the "subdued" $US price of Gold.