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. On Friday, June 8 - exactly three weeks later, Gold "leaped" $US 7.40 to $US 273.40 - all of the rise coming in New York after London had closed for the week. There seems to be an echo in here somewhere
Three weeks ago, Gold suddenly took off for no apparent reason. It was firmly beaten back down, starting with a Russian Gold sale scare on May 24. As subsequent events have shown, Russia is actually INCREASING its Gold holdings, it is NOT selling Gold. Never mind, Gold was firmly back trading in the mid $US 260s, until it took off again on June 8.
So, we have had an initial run up, we have had a correction, we have had almost two weeks of "range trading" to find solid support. And now, the Gold price has suddenly spurted AGAIN.
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 32.20. Nearly half of that rise (43% of it) came on May 18. Nine trading days later, spot future Gold closed at $US 264.90. That's a retracement of $US 22.90 or just over 70% of the rise.
A correction of that magnitude after an initial run up is a bit on the excessive side, but not overly so. All initial spikes after long bottom formations correct, and a correction of 70% is not unusual. And after all, we're talking about GOLD here. It's not supposed to rise for ANY reason.
"All we can say with certainty about this market "action" is that Gold has certainly 'woken up'."
The Gold Bottom - May 25
As we have already pointed out in our Gold Bottoms studies, Comex spot future Gold has hit the low $US 250s twice - in August/Sept 1999 and again in February and April this year. Now, we have had a run up, a correction, a consolidation in the mid $US 260s and the start of another run up.
That kind of action is pretty standard for any market which has established a solid bottom over a pretty lengthy period. Gold in all the currencies we follow - except the $US - is still in a solid uptrend. The $US itself, as measured by the $US index, is hovering at or just below 15 year highs. And now, Gold has broken out - twice in three weeks.
All of the charts on this page show that THIS move on Gold is the critical one. What made the last two Gold upmoves (in late 1999 and early 2000) into "spikes" was that Gold did NOT reach its previous highs after correcting.
On an intraday basis in New York, Gold got as high as $US 293.50 on May 21. In Asia in early trading on May 21, Gold stalled just below the $US 300 level. As The Privateer has said ever since Gold dipped below the $US 300 level in late 1997, Gold has to get above $US 300 - and STAY there - before a genuine BULL market can emerge.
We shall watch THIS move with GREAT interest. Stay tuned, updates as and when required.