(Gold did not trade in the US on June 11 due to the funeral of Ronald Reagan.)
Last week, $US Gold had its first challenge of the $US 400 level - its intraday high on June 1 was $US 399.00. This week, a short week due to the Reagan funeral on June 11, Gold slumped in lock step with the "successful" US resolution adopted uninimously by the UN and with the G8 meeting. on June 8 and 9, Gold fell back $US 9.20 before closing the week on June 10 at $US 385.90 - a fall on the week of $US 5.10.
IN the two weeks between May 13 and May 27, spot future Gold gained exactly $US 20.00. In the two weeks since May 27, spot future Gold has lost exactly $US 9.00 or just under half of its rebound.
While Mr Greenspan has recently stated that he will consider raising US rates more aggressively "if necessary", his counterparts at the Bank of England (BoE) have obviously concluded that it IS necssary. The BoE has just raised their rates by 0.25% for the second time in a month. There are still a little over two weeks to go before the worlds sees if the Fed will (at least start to) follow suit.
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. As you can see, that has not changed despite Gold's current correction.
On the daily bar chart, Gold has spent the week bouncing around between its two moving averages. The shorter-term (10 day) moving average (MA) remains comfortably above the longer-term (20 day) MA - but the gap is again narrowing. With the Gold price now again back (just) below both moving averages, we are once again looking for support levels on this chart.
The weekly bar chart shows the first "down" week in the last four weeks with both intraday and closing highs down o nthe week. Gold remains below its 200 day moving average with the gap between the 100 and 200 day averages having all but closed. These two moving averages have not "crossed over", shorter term below longer term, since late 2001. A crossover in the near future looks almost certain, unless Gold can get back above $US 400 FAST - and stay there.
You can see how the uptrend line on the point and figure chart has been confirmed by Gold's correction. Now, after hitting the line repeatedly and then rebounding over the past three weeks, we have another "mini correction" back towards the line. On this chart, there is solid support for Gold in the region of $US 380-382. We must wait to see if it holds.
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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Despite the US Commerce department's heroics in reporting new job creation averaging over 300,000 in the last three months, their brethren in the US Labor department do not seem to have such wondrous control over their computers. For the fourth time this year, the Producer Price Index figure has been delayed due to "unexpected difficulties in calculating the index". The May figure was due out on Thursday, it has not been announced.
Pathetic, isn't it. When the government's computers come up with a figure they like, there are no difficulties in either "calculating" in nor in announcing it. When their figures don't come out in the way they like, they simply change the method of calculation until they do. A "cynical" economist once described the role of individuals in modern ecomic theory as: "that which fits economic equations". Examine the modern practices of deriving government statistics and one could be forgiven for gaining the impression that anything "fits", because anything most certainly goes.
Yet even with the panapoly of "economic variabilities" available to government statisticians, they still can't get a Producer Price Index figure to their liking. It must be a WHOLE lot worse than even the least starry eyed analyst on Wall Street thinks it is.
There are now a little over two weeks until the FOMC meeting. The $US Gold price has now given up about half of its recent recovery. We wait to see where the next "support point" occurs.