Oops, a "down" day on a Friday on the Comex Gold "market" for a change. Four Fridays ago, on May 18, Gold leaped $US 13.80. Last Friday, June 8, Gold jumped $US 7.40. This Friday, June 14, spot future Gold fell $US 4.10 from $US 275.30 to $US 271.20. As you can see on the weekly chart, that left Gold with a loss of $US 2.10 this week.
Please note that because of Gold's increased "volatility" over the past month (moves of several Dollars in both directions are becoming more the norm than the exception), we have changed the scale of the Point and Figure chart on this page. Previously, the chart was $US 0.50 x 3. The scale is now $US 1.00 x 3.
Looking at the point and figure chart, the feature that stands out is the wide "double bottom" at the $US 256 level. You can see clearly the change of direction which came right after that double bottom was established.
And what of the $US 4.10 fall on June 22. Well, technically, none of the charts have been "hurt" by it. But looking further, consider the fact that about two weeks ago, Mr Greenspan started a rolling thunder of assertions at every opportunity. The gist of these assertions was that he could see "no signs of inflation". Over the past week, these assertions have been echoed by several of his Fed colleagues.
Sure enough, on June 14, the May U.S. PPI was announced to be up 0.1%, below expectations. And on June 22, the May CPI came out at 0.4%. But "not to worry", the "core CPI (minus electricity and energy costs) came in at 0.1%. See - there isn't any "inflation", is there?
Problem is, there isn't any "growth" either. The Nasdaq just finished its worst one week performance so far this year, it fell 8.4%. This week too, the Dow went into the red for 2001. The result? Wall Street is starting to "expect" yet another 0.50% rate cut when the FOMC meets on June 26-27.
Gold has indeed "woken up" after the $US 13.80 jump of May 18. To show just how much it has woken up, consider the "action" earlier in 2001. Here are the biggest one day moves over the first four months of 2001.
On top of that, up until the $US 13.80 spike on May 18, Gold's trading range for the WHOLE of 2001 had been less than $US 19.00. In not much more than one trading day, between the New York close on Thursday, May 17 and the Asian opening on Monday, May 21, Gold spiked from $US 274 to almost $US 300.
Gold's $US 4.10 correction on June 22 was attributed by traders on the floor to "profit taking" with no-one seeming too sure which way the metal would head next. The one thing that all were agreed on was that "volatility" had increased.
A bottom we still have, a bull market or even a reliable uptrend we still do not have. Of course, at the risk of repeating ourselves, that's in terms of the U.S. Dollar. In terms of every other major currency, we DO have a bull market in Gold.
This week was a bad one for most stock markets right around the world. The only exceptions we can find are Asian markets like South Korea and Taiwan, where ramping is a fine art, and the Aussie market, which was not blown out of proportion in the late 1990s run up. Japan fell over 4.% this week. In the U.S., the Dow is once again in the red for 2001 while the Nasdaq had its worst week of the year to date, falling more than 8%.
And finally, the U.S. Dollar itself, after hitting a post-1986 high on the $US index on Monday, has come off this week.
We wait patiently for the $US Gold price to move from its long bottom formation into a confirmed bull market. That's going to take a Gold price of $US 300 plus. The next big test is how the $US fares in coming weeks, and what happens when the Fed cuts rates again on June 26-27.