With the $US 10.50 jump in the spot future Gold closing price on June 17-18, there is now a second support area for Gold established. The first support area was in the mid $US 370s established in mid May. This support area is in the mid $US 380s established over the period June 9 - 16. Now, all we need to CONFIRM the bottom for the recent correction in the $US Gold price is a spot future close back above the $US 400 level.
IN the two weeks between May 13 and May 27, spot future Gold gained exactly $US 20.00, rising from $US 374.90 to $US 394.90. Thus far in the current recovery, Gold has gained $US 11.50 in the four trading days since its close of $US 383.60 on June 14. However, Gold has so far only exceeded the high close made in the late May recovery by $US 0.20. This is not decisive. A close back above the $US 400 level would be.
Please note carefully here that the Gold bull market which was established when Gold finally broke back above $US 300 to stay in March 2002 is still perfectly intact. What we are looking for here is merely a bottom to the most recent (post April 1, 2004) correction within that bull market.
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, you can see a most encouraging sign in the gap-up action on Friday, June 18 (Gold rose $US 6.20 on that day). You can see that the shorter-term (10 day) moving average (MA) has again crossed below the longer-term (20 day) MA, but the price has again moved well above both. You can also see the new solid support in the mid $Us 380s on this chart.
The weekly bar chart shows that in essence, Gold has been going sideways on a weekly basis for a month now. To break out of this sideways action, and to get back above both the 100 and 200 day moving averages. Gold needs to regain and surpass the $US 400 level. If it does so soon, we may not get a crossover on these two moving averages, an event which has not occurred since late 2001.
The point and figure chart presents a VERY pretty picture. The uptrend line has now been confirmed for a second time with Gold's dip into the $US 380s and subsequent upmove. To improve still further, the chart must move above the highs ($US 394.90 spot future close) set at the end of its first recovery back in late May. Again, this points towards a regaining of the $Us 400 level. This is still required to be confident that the post April 1 correction is over.
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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As you probably know, the release of the monthly Producer Price Index (PPI) figure was postponed for the fourth time this year last week. The figure for May - +0.8 (core +0.3%) - was finally released on June 17. This was the biggest monthly increase in 14 months.
The PPI figure was said to have caused increased "inflation jitters" on Wall Street, even though the Dow fell a mere two points on the day. They probably fastened on an aside in the PPI reporting which stated that over the past 12 months, producer prices "as a whole" have risen by 5.7% - the biggest annualised rise since 1990.
In 1990, the Fed Funds rate fluctuated between 8.25% and 7.25%. Over the past year, the Fed Funds Rate hasn't fluctuated at all. It has been fixed at 1.00%. Fourteen years ago, an "inflation indicator" like an annualised PPI jump of 5.7% had the Fed with official rates SEVEN to EIGHT times as high as they are now.
The era of low US interest rates, specifically of grotesquely and indefensibly low US interest rates, will come to the beginning of its end in just over a week from now. The $US 10 plus jump in the $US Gold price over June 17-18 is a small advance warning of what the results of THAT are going to be.