If you want to know why spot future Gold traded at or above the $US 412 level on both September 23 and 24, only to close at $US 411 on Setember 23 and fall back to close the week at $US 408.10 on September 24, take a look at the $US 1 x 3 point and figure chart on our Gold charts page.
See the dotted red line anchored in Gold's $US 427.80 2004 spot future high closing level of April 1? That's the line that Gold is now challenging, and broke through as Gold traded up to $US 412 in intraday trading. This chart is based on CLOSING prices however, and as you can see, the line is still holding. The highest spot future Gold close since April 2004 is $US 413.20 set on August 20. Gold has been challenging that level this week.
A Gold spot future close above $US 413, and especially one above $US 416, would reaffirm the higher-highs higher-lows of the gradual recovery of the Gold bull market, a recovery which has been going since the May 2004 lows. This is NOT something that either of the contending parties want to have happen while the Presidential election is underway. Hence the proliferation of "scare stories" about Gold this week, and the failure to break above the trendline on the Gold chart.
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, the Gold picture has improved in two ways. First, Gold has spent the entire week trading above both its 10 and 20 day moving averages. Second, the shorter-term 10 day MA has once again moved above the longer-term 20 day MA. The last time this happened, in early August, spot future Gold climbed to set post April 2004 highs. And the crossover has occured from a higher level this time.
On the weekly chart, Gold is back into the $US 400 - 410 trading range it has been tracing out over the past five weeks after having threatened to breach it on both September 23 and 24. Gold remains above both moving averages, with the shorter-term (20 week) MA now curving back up towards the longer-term (40 week). A crossover of these averages, shorter-term back above longer-term, would be THE signal for another challenge to 2004 highs.
The point and figure chart, you can see that Gold has now recovered all its previous downturn, and a bit more. It is now squarely at resistance levels at or just above he $US 410 level.
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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On Wall Street, there is now a lot of talk about the pending second anniversary of the Dow's new "bull market". Yes, it is called a bull market, NOT a bear market recovery. On October 9, 2002, the Dow closed at 7286 its lowest level since its 11723 all time high of January 2000. On September 24, 2004, the Dow closed at 10047. Since its low, the Dow is up 37.9%
The lowest spot future close for Gold since that Dow low was $US 310.90 set on October 21, 2002. On September 24, 2004, spot future Gold closed at $Us 408.10. Since the Dow's so called "bull market" began in October 2002, Gold is up 31.3%. There's not a lot in it, is there?
Of course, the Dow's recovery since October 2002 has NOT been a "bull market", it has been a recovery, albeit a sharp recovery, in a bear market. From their respective lows in October 2002, the Dow has done a bit better in Gold in percentage terms. There is one big difference, however. The Dow and the other US stock indexes are still in confirmed bear markets. $US Gold is still in a confirmed bull market.