On November 5, 2004, spot future Gold closed up $US 3.50 to $US 434.30. The last spot future Gold closing price which was higher than that took place on December 6, 1988 when Gold closed at $US 437.80. December 1988 was a LONG time ago, not much more than a year after the crash of 1987 and about mid way through Ronald Reagan's second term.
Last week, on October 29, spot future Gold closed the week at $US 429.40, 0.4% above the old 2004 high of $US 427.80 set on April 1 and not enough to be decisive. This week, Gold was duly knocked down $US 7.40 on election day, November 2, regained that loss within 48 hours, and then went on to post an almost decisive new high in its post 2001 bull market by the November 5 close. We say "almost" decisive for reasons which will be expanded below.
The US election has been won, and lost. Mr Bush has another four years - barring Watergate style "accidents". The US Dollar, as measured by the $US index, has now firmly embarked on the next leg of its post 2002 bear market. The $US index hit new bear market lows on November 3, 4, and 5, ending the week at 84.07, down 0.91 points on the week and over a full point below its previous 2004 low of 85.12 set back in February.
Thus, the upward movement in the $US Gold price is still mirroring the downward movement of the US Dollar. Gold in terms of most other major currencies has not moved up at all this week, in most cases, it has lost ground slightly.
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 chart, the "railroad track" is firmly intact with the two (10 and 20 day) moving averages moving smoothly up below the Gold price. Naturally, Gold is at the highest level shown on this chart - which only goes back to early August. Gold spent all of last week (October 25 - 29) bouncing off the $US 430 level on an intraday basis. This week, the $US 430 level was decisively breached and a new leg on the bull market established.
The weekly Gold chart illustrates the power of the moving average (MA) crossover signal. The crossover - shorter-term (20 week) MA crossing back above longer-term (40 week) MA - took place three weeks ago. Last week, the Gold price set new 2004 highs. This week, Gold has moved higher to set decisive new bull market highs, breaking well above the resistance at $US 430 in the process.
Last week, we awaited only a decisive new high on the weekly Gold chart. This week, we have one.
The most important technical improvement in Gold has come in the $US 1 x 3 point and figure chart. On October 29, with Gold closing just above the $US 429 level, there was a potential double top on the chart. With Gold's $US 7.40 fall on November 2, that potential double top became an actual double top - as you can see on the chart.
Here's what we said about the point and figure chart last week:
"...Take a look at the point and figure chart. What you see here is a potential "double top". If Gold fails to close above $US 430 before falling to close at $US 426 or lower, the potential double top will become an actual double top. On the other hand, if Gold continues to move up next week and reaches a closing level of $US 432 or higher, we will have a "breakaway gap" on this chart and have confirmation of the next stage of the $US Gold bull market."
As it happens, Gold did BOTH this week, it established the double top and then smashed through it to the upside to confirm the next stage of the $US Gold bull market.
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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Now to the "almost" decisive new highs for Gold this week mentioned above. To really gauge the LONG TERM potential for this $US bull market, we need to refer to our strategic $US 5 x 3 point and figure chart. Last week, Gold was sitting at $US 425 on this chart for the third time this year. In February and April 2004, spot future Gold did not manage to close at $US 430 or higher. Now, spot future Gold HAS managed to close at $US 430 - and has climbed most of the way to $US 435. This eliminates the possibility of a wide TRIPLE top being formed on this chart.
As we said here last week: "The final signal of the second major leg in $US Gold's post 2001 bull market awaits a spot future close of $US 440 or higher. That would act as the final confirmation of the (dashed) uptrend line on the chart, and signal a rock solid LONG TERM $US Gold bull market. It would also, in all likelihood, signal an upside acceleration of the $US Gold price.