Just over a week ago, on October 30, Gold opened above the $US 390 level. Two trading days later on November 4, Gold closed all the way down to $US 377.10. Since then, Gold has been in a tight range just above $US 380. Two weeks ago, Gold gained $US 17.10. Last week, Gold fell $US 4.30. This week (Nov. 3-7) Gold has lost another $US 1.20 to close on November 7 at $US 383.40.
So far, Gold has lost $US 5.50 or about 32% of its gains of two weeks ago. Not bad in the midst of an avalanche of US Government statistics purporting to "prove" that the US economy is recovering fast. Not bad with the Fed informing all who will listen that they are vigilant to prevent inflation falling "too low" and that they will be able to hold present 1.0% official interest rates at present levels for a "considerable period".
This is the third successive Friday when Gold has closed above the $US 380 level. That hasn't happened since October 1996 - a long time ago.
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.
There is one feature common to all three charts on this page. They all show what is called an "inverted" head and shoulders pattern. On a normal head and shoulders, the head is above the shoulders. On an inverted pattern, the head is below the shoulders. A normal "head and shoulders" is usually resolved to the downside. And "inverted" head and shoulders is usually resolved to the upside.
On the daily bar chart, you can see that ever since Monday, November 3 when spot future Gold closed at $US 377.10, Gold has repeatedly tried to break below $US 380 but has not closed below $US 380. Most of the week's trading has been in a tight range between the short-term (ten day) and long-term (twenty day) moving averages.
On the weekly bar chart, there have now been two attempts to break through the $US 390 level in the past six weeks. After the first one, Gold corrected down to $US 370. Afther the second one, Gold has, so far, corrected back down to just above the $US 377 level. The correction from the September 24 high lasted a month. So far, the correction from the October 24 high has lasted two weeks.
On the point and figure chart, Gold has now turned up from the low close of $US 378 it set on Monday, November 3 and is about halfway back to its October 24 high.
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 $US 387.20 on September 22, it established a new upleg in its post April 2001 bull market. It did this by closing significantly above its previous 2003 high ($US 379) which had been set nearly nine months earlier in early February. Gold has spent almost all of the past three weeks trading above that February high. The confirmation of the second leg has been in place for six weeks. Now we are waiting for a REAL breakout.