On April 1, spot future Gold traded above the $US 430 level on an intraday basis for the first time this year, and the first time since 1991. That was "too close for comfort" for the financial powers that be in the US. Presto, a startlingly "good" employment report for March was released on April 2 and by April 5 Gold had fallen $US 12.40 to close on the day back "under control" at $US 415.40. You can see this dive clearly on the daily bar chart to the left.
Gold has already surpassed the top of its last bull market in February 1996. The bull market before that topped out in December 1987 at slightly above the $US 500 level, just below the top of the bull market before that set in Jan/Feb 1983. When Gold hit its $US 432.00 intraday high on April 1, it was getting uncomfortably close to its January 1990 intraday high of $US 436.70. Above that stood only the two $US 500 bull market peaks of 1982 and 1987.
Gold has not closed above $US 440 since 1988. It has not closed above $US 515 since 1981. Gold in the $US 430s, a situation which briefly came to pass on April 1, was highly dangerous. Thus, so far at least, Gold has not managed to decisively break above its January 2004 highs and is once more "safely" contained just below the $US 420 level.
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.
On the daily bar chart, you can see the comparatively big reaction to the US employment numbers on the chart. For the first time since Gold's latest run above $US 400 began on March 16, the chart dipped below its shorter-term (10 day) moving average and by its intraday low on April 2 had descended to just above the longer-term (20 day) moving average. Since April 2, Gold has been trading between the two moving averages for most of the time, the exception being the break back above $US 420 on April 7.
On the weekly bar chart shows what is almost, but not quite, a wide double top. After trading above its previous 2004 high last week, Gold has come back into the "safe" zone again. Please note that the weekly closing levels for the past three weeks are very close together just above or below the $US 420 level. Last week we said that a $US 4.00 difference in intraday highs ($US 428 in January - $US 432 on March 31) "should" be enough to start another upward run. No so far.
On the point and figure chart, Gold has been crossing and recrossing the steepest of it uptrend lines for two weeks before falling back below the line with its $US 12.40 retreat on April 2-5. Two weeks ago, we stated that a close of $US 429 or higher (spot closing basis) would signal the END of the correction and the start of the next upleg on the $US Gold bull. We didn't get it. Now, spot future Gold must close ABOVE the $US 430 level to give us that signal. Finally, like the weekly bar chart, the point and figure chart shows what is almost, but not quite, a wide double top.
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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The two weeks beteeen March 12 and March 26 gave out the worst signal possible for the financial powers that be. After more than a year during which Gold's bull market in $US terms was sustained but Gold was going sideways (at best) in terms of most other major global currencies, Gold all of a sudden took off in terms of ALL currencies.
Since March 26, Gold has gone higher in $US terms, just managing to surpass its January 2004 highs, and then corrected. It's climb in terms of most other currencies has stalled. In the Euro's case, Gold has spent the past the time since March 26 (when it reached 349.20 Euros - within one Euro of its all time high) hovering in the mid-high 340 Euro level just below all time highs in that currency.
As we stated in our main Gold commentary of March 26, THE signal for Gold now is for the metal to set new "21st century highs" in terms of both $US and Euro. Thus far, it hasn't made in terms of either currency.
We await that event patiently as THE signal of the start of the next and BIG leg of the Gold bull market. With the Bush Administration fighting to maintain the fiction of a "strong" US economy, with the Treasury still maintaining the fiction of a "strong Dollar policy", and with the Fed hanging onto their present 1.0% rates like grim death, the stakes are HUGE. In the financial system and in the markets, the main fiction still being maintained is that US price inflation remains "benign". A rampant Gold price would blow this fable right out of the water.