As we have been stating for weeks: "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." Last week, Gold got there with a spot future price closed at $US 440.50 on November 15. By November 19, it was up to $US 447. By November 24, spot future Gold was up to $US 449.30. That's where it stopped in the US this week as the Comex metals markets closed for the Thanksgiving holiday on November 25-26.
Since November 24, Gold has consistently been trading at levels above $US 450 both in Asia and in London. Gold reached $US 455 in early trading in London on November 26, before falling back with an attempted rally on the US Dollar to close the week at $US 451.00.
The G-20 summit of Financial Ministers and Central Bankers ended last weekend as yet another damp squib, with some guarded comments about the unsustainability of US trade and current account deficits but with almost no mention whatsoever of currencies. The rumours have continued to proliferate about nations selling Dollars and Dollar debt instruments. But for almost half the week, the US markets were insulated from it all by the holiday.
Notably, the volume on the Comex over the three days of the week when Gold did change were huge, culminating with a MASSIVE 290000 contracts on Wednesday, November 24. This is certainly the biggest one day volume on Comex Gold that we have seen.
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, nothing has changed, with Gold continuing to rise on a daily basis. The "railroad track" remains 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. This week, of course, Gold got within a whisker of $US 450 before Thanksgiving and has consistently been trading above that level outside the US since.
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 five weeks ago. Three weeks ago, the Gold price set new 2004 highs, breaking above the spot future closing highs set back in April. Last week, Gold has given the final confirmation of the second leg of its bull market by breaking above the $US 440 level. And over this shortened week Gold has stalled just below the $US 450 level.
On the point and figure chart, Gold continues to climb to levels last seen in 1988, in the process firming the new steeper uptrend line (the green line) seen on the chart. At present levels, the recent upmove on the chart (which began the day after the election from the $US 421 level) is now the biggest on the chart. The only question is whether the "powers that be" have drawn a line in the sand at $US 450. If they have, Gold may be expected to turn down at or about present levels. Such a downturn would not damage this chart in the slightest.
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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The $US 440 level has been decisively breached on the $US 5 x 3 point and figure chart. That is the final and conclusive technical evidence that $US Gold is now in the second leg of its bull market. The trendline on the chart (see the link) is now a POWERFUL support for the bull.
What we are waiting for now, as the final piece in the "puzzle" is the onset of Gold rising in terms of ALL major currencies, not just the US Dollar. That is what happened in December 2002 and 2003. In the meantime, we may or may not have a Dollar rally.