On Friday, May 18, Gold leaped $US 13.80 to $US 287.80 - all of the rise coming in New York after London had closed for the week. That $US 287.80 is as high as the spot future close got, although it did get into the low $US 290s in early trading on Monday May 21.
The beginning of the swan dive was the Russian Gold sale scare of May 24. But the real "action" came after the long Memorial Day weekend. On May 29-30, the spot future Gold price plummeted $US 12.50 to $US 265.70. You can see that on the charts to the left.
Spectacular, isn't it? Well, there are many people who have come up with other terms to describe it, none of them suitable for "mixed company". There ain't nothing like the gold markets to watch a rally "turn on a dime".
Now, let's take a look at the whole thing in perspective. On a spot future closing basis, Gold rose from $US 255.60 on April 2 to $US 287.80 on May 18. That's seven straight weeks of rises totalling $US $US 32.20. Nearly half of that rise (43% of it) came on May 18. Eight trading days later, spot future Gold closed at $US 265.30. That's a retracement of $US 22.40 or just under 70% of the rise.
On May 17, the day before the $US 14.80 rise, spot future Gold had closed at $US 274.00. This close was the first time that the metal had been "in the black" in $US terms so far in 2001. Spot future Gold closed 2000 at $US 273.60. On May 18, Gold sported a 5.2% rise in $US terms in 2001. At its close of $US 266.40 on June 4, Gold was once again showing a loss - of (2.6%) on the year.
"All we can say with certainty about this market "action" is that Gold has certainly 'woken up'."
The Gold Bottom - May 25
We can still say that, and we have more to say about it on our main Gold This Week commentary. Gold went up for seven weeks and then fell for eight straight trading days, wiping out about 70% of the rises. We have seen many like instances of this in stock markets over the past few years, with this BIG difference. Stock markets (and U.S. stock markets especially) have done these wild swings in the wider context of a long-term uptrend. Gold has just done the third of these swoops and dives in the context of an almost two year old BOTTOM FORMATION.
The bottom formation consists of the Gold's move to the low $US 250s in August/September 1999 and its return to those levels in early April 2001. Now, we have had the first solid upside break after a period of more than a year (since February 2000) during which the price trended steadily lower.
As we discuss in our main commentary this week, the surge in both short and open interest has evaporated now that Gold is back in the doldrums. Mission accomplished, this time.
And the charts? We need to see where they consolidate again. The longer-term $US charts still show uptrends. The non-$US Gold charts (see the links above) still show well established uptrends.
We have a very hairy $US 50 trading range for Gold between $US 250 and $US 300. Gold almost hit the bottom of it at the beginning of April. It hit the top of it in early Asian trading on May 21 - for the first time since February 2000. Gold has awakened in $US terms, it is not likely to go back to sleep this time. Stay tuned.