"By all technical precedent, Gold should remain in its upchannel - that is - it should not break below the bottom trendline now set just below the $US 370 level. $US 370 is now established as support on all three charts."
(The Gold Bull Market - October 17, 2003)
As a cursory glance at any of the three charts to the left will show, Gold DID hold its $US 370 support. Even better, exactly one month after spot future Comex Gold closed at a new 2003 high of $US 387.50 on September 24, Gold has gone on to set a new high of $US 388.90 on October 24. This is EXCELLENT technical validation of the $US Gold uptrend and bull market.
Not only is it an excellent technical validation of $US Gold, Gold in terms of Yen, Euros, and Aussie Dollars has rebounded upward this week. Gold is again climbing against even the "strong" currencies, not just the steadily weakening US Dollar.
The Gold price in $US terms remains the one that everyone watches. Anyone, anywhere with an interest in Gold can tell you the "price" of Gold in $US terms. Surprisingly few non Americans, however, can tell you the "price" of Gold in their own currency. The "strength" of Gold, and its market direction, is measured almost universally by its $US "price".
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.
This week, Gold was up $US 17.10 or 4.6%. The $US index was down 1.09 points or 1.2%.
On the daily bar chart, you are looking at a new closing high for spot future Gold. The intraday high of $US 394 on October 24 also (just) beat the $US 393.80 intraday high of September 25. Apart for no less than THREE "gap up" days over the week, the other notable feature on the chart is that the shorter-term (10 day) moving average has crossed back above the longer-term (20 day) one.
On the weekly bar chart, there is a new closing high for the year and a potential "double top". The $US 370 level has been confirmed as support. Of all the corrections so far this year, the correction from the September 24 high is by far the shortest. It has taken Gold only a month to regain its highs..
On the point and figure chart, we have another tight distribution zone has been broken out of - to the upside. The last time this happened, Gold went from a distribution zone in the low $US 360s to its September 24 $US 387.50 high. Right now, Gold is one "X" above that September high on the chart. Any close of $US 390 or above would be the signal for another upleg, with the caveat of the $US 400 psychological barrier.
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.
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. After a month long correction, Gold is once again poised at the threshhold of $US 400. This time, we think it will make it.