We must repeat here what we said two weeks ago:
"Something is going to give here, and in the not too distant future too."
On June 10, the "something that gave" was the Euro Gold price. It climbed to a new all time high of Euros 352.30, exceeding a high which had been set more than three years ago in late May 2002 - see our main Gold commentary for more on this.
For Gold in $US too, this week has been a potential sea change. For most of the week, the $US Gold price was inching lower after its $US 11 upwards surge between June 1 and June 6. Then came June 10. In early trading, as a reaction to Mr Greenspan's assiduous "talking up" of the US economy this week, the $US rising, Gold was falling, and the Euro was falling faster.
But then came an abrupt turnaround. As Gold burst through the Euro 350 level, it staged an instant turnaround in US Dollar terms too. By the end of trading on June 10, the spot future Gold contract on the Comex was up $US 3.40 - in the face of a $US index which was itself up 0.67 points to a new 2005 high of 88.72.
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 since March 2002?
Please note that Gold is up $US 7,60 over the past two weeks in the face of a $US index which has risen 2.32 points or 2.7%. Now THAT'S unusual. "What we must await now is for the shorter-term average to cross back above the longer-term average." That's what we said here last week about the daily bar chart. AS you can see, that has now happened, with the Gold price once again leaping higher after having dipped down to those two moving averages. All the tactical signals for a $US Gold rally are once again intact.
On the weekly Gold chart, the main concern for traders two weeks ago was the fact that Gold has broken back below its 40 week (200 day) moving average (MA). Gold has now climbed right back up to that long-term MA. And, it has PERFECTLY comfirmed its uptrend line in the process.
And finally, here's the upturn on the point and figure chart too, pushing the price back above the trendline it had violated when it fell below the $US 420 level. On this chart, it's early days yet, with Gold having recouped a bit more than half of its recent falls.
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.
As you can see, the $US 5 x 3 Gold chart has now turned down again and the pattern has filled in a BIG distribution zone between $US 410 and $US 455. Gold has not traded below the $US 400 level since September 2004. To show definite signs of weakness on this chart, it will have to go down there again.
Gold's new all time high on the Euro on June 10 gives even more importance to this chart, it was Gold's rise into the mid $US 450s in December 2004 which confirmed finally and beyond doubt Gold's $US bull market by making it possible to draw an uptrend line on it.
On an equivalent Gold in Euros chart, a Gold close of Euros 365 or higher would be required to confirm a new leg in the Gold bull market. On the $US Gold chart, a close of $US 435.00 or higher is required to turn the chart up. A new upleg on the bull market would require a close of $US 470 or higher.