Last week ,there was the absolute CLASSIC "Gold raid" by the boys on the Comex market in New York. On October 3, spot future Comex Gold closed down $US 13.70 on the day at $US 369.40. This week, Gold has closed $US 4.20 above that level at $US 373.60, even though there was another "mini-raid" on October 9 which drove the Comex Gold price down $US 6.20 to $US 369.20, $US 0.20 below its close on October 3.
Take a look at these point and figure chart of Gold in terms of Yen, Euros, and Aussie Dollars. Note the precipitous falls from recent highs in all three currencies (and many more, by the way). These falls have come since Gold hit its 2003 highs ($US 387.50 on a spot future closing basis) in $US terms on September 24, just over two weeks ago.
These Gold falls in terms of "foreign" currencies are a direct reflection of the fact that Gold is down in $US terms even though the $US has continued to FALL in terms of all other major world currencies. For non-Americans, Gold is becoming an ever more screaming bargain, especially as the cost of holding $US and $US denominated "investments" continues to rise.
Technically, Gold is certainly not in the clear cut bull market in terms of these "foreign" currencies that it is in $US terms, despite its recent $US falls. It has, however, reached previous support points. Given this fact, and given the fact that the $US Gold price is universally regarded as THE Gold price, even by those who do not buy Gold with $US, and the temptation to buy Gold is rapidly increasing, everywhere.
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.
It has been a "fragmented" week's trading on the daily bar chart. As you can see, Gold immediately bounced back from the October 3 selloff early in the week and then was hit again, falling $US 6.20, on Thursday, October 9. After the smoke had cleared, however, Gold was up for the week. On this chart, the post August uptrend has been broken and the shorter term (10 day) moving average has moved below the longer-term one.
On the weekly bar chart, we have a support level just below the $US 370 level - $US 10 above the major $US 360 support level we identified last week. All technical indicators on this chart remain firmly bullish. Support has been found well above the red dotted line connecting the earlier 2003 highs. All uptrend lines are perfectly intact. The shorter term moving average remains firmly above the longer term one.
On the point and figure chart is interesting, a double bottom has been established at $US 370. Look back to the area just before the May upmove to find the previous one and note what followed. A double bottom is a good indicator of a support area, but not necessarily a guarantee. Watch this chart to see if it holds - the $US 369 area has become important.
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.
As we stated here last week, we must reiterate that when Gold rose $US 5.30 to $US 387.20 on September 22, it established a new upleg in its post April 2001 bull market. It did this by closing significantly above its previous 2003 high which had been set nearly nine months earlier in early February. As long as the major uptrend lines remain intact, so does the bull market. And with the new upleg confirmed, it is merely a matter of time before Gold once again challenges, and surpasses, its late September highs in $US terms.