Last week was the first week this year in which Gold regained or surpassed its levels at the beginning of the year in terms of ALL (thirteen) major currencies we watch. Combine this with the $11.00 plus rise in $US terms, the renewed weakness in the US Dollar itself, and the continuing boom in the CRB index, and it is clear to see that alarm bells were going off all over Washington and Wall Street.
Thus, $US Gold promptly fell $US 5.00 plus at the start of this week, and had another $US 5.00 plus fall on Thursday, March 17. The US Dollar recovered slightly. Amazingly enough, one of the reasons given for the $US recovery was that the Fed might signal an acceleration of rate rises when it meets on March 22, or might even raise rates by more than the by now obligatory 0.25%. On this front, the yield on three-month paper is now up to 2.80%.
Between February 18 and March 16, the CRB rose from 290.65 to 322.40. That's a rise of 31.75 points or almost 11%. By the end of the week, the CRB had snuck back down below the 320 level, closing on March 18 at 319.20. Gold contributed to this fall with a drop of $US 5.10 on March 17.
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. Which of the three would you have preferred to own in the nearly three years since March 2002?
On the daily chart, we stated here last week that any spot future close above $US 440 would be a strong signal of another run at the December highs in the mid $US 450s. We got a $US 449 close last Friday but a week later, Gold is down to just below the $US 440 level again. The price has thus fallen back below the shorter-term (10 day) moving average (MA) to now rest mid way between it and the longer-term (20 day) MA
On the weekly Gold chart, Gold remains above both (20 and 40 week) MAs as it has for the past month. This week was what is called an "inside week" meaning that the high and low for this week were both inside (lower than and higher than) the high and low set last week. Such a situation is usually looked at as being a "consolidation" phase. We'll see.
On the point and figure chart, we have a second downturn on the chart since the bottom of the correction a little over a month ago. Support on this downturn comes at the top of the first upleg around the $US 437-38 level. On the upside, resistance stands at the recent highs around the $US 447 level. There is no sign of weakness on this chart unless and until the Gold price retreats to below the $US 430 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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As we have been saying since last November, the chart to watch is the indeterminate future continues to be the $US 5 x 3 point and figure chart. The uptrend line established on this chart when Gold broke above the $US 440 level in November 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 a POWERFUL support for the bull.
Please note once again the significance of the $US 440 level. It was this level which confirmed the next leg of Gold's bull market on the $US 5 x 3 chart when it was breached on the upside back in November last year. Now, after having been breached again last week, Gold has closed this week just below the $US 440 level. With the old Gold high being $Us 455 on this chart, the signal of a definitive new upleg in the $US Gold bull market awaits a spot future close of $US 470 or higher.