In May Gold fell $US 19.80. In June, it rose $US 20.80. Thus far in July, Gold has fallen $US 13.30. This is getting to the point where it might even be described as "volatile".
Political pressures have been steadily mounting in the US. The atrocity this week in London, while the G-8 Heads of State were meeting a few hundred miles north in Gleneagles, Scotland, will do nothing to lessen them. The reaction of the leaders meeting at the G-8, particularly Mr Blair and Mr Bush, was predictable enough - "We will redouble our efforts to 'beat' terrorism and protect you". The problem is that it is getting pretty threadbare.
The main focus of the G-8 was supposed to be the forgiveness of African debt. We will probably never know the precise details of what the REAL focus was, but it's a safe bet that there were other issues of more pressing a nature which were discussed behind tightly closed doors.
One of these was undoubtedly what both the OECD and the BIS has chosen to call the "global financial imbalances" - translated from diplomatese - the gigantic US trade and currenc account deficits. Another would have been the unseemly global scramble for oil supplies, with the attendant trampling over what used to be called "sovereignty" in the process.
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?
On the daily bar chart, having broken back below both its 10 and 20 day moving averages last week, $US Gold is now trying to trace out another trading range at or about the $US 425 level. The significant feature on the chart is that the shorter-term MA has once again crossed blow the longer-term MA.
On the weekly Gold chart, Gold bolted back above its 40 week (200 day) moving average (MA) after having PERFECTLY comfirmed its uptrend line in the June upmove. It also rose slightly above the trendline connecting the December 2004 and March 2005 peaks (the dotted red line). That resistance has now made itself felt, with Gold now having retreated back below both moving averages and nearly back to the uptrend line.
the picture is the same on the Point and Figure chart. Same narrow penetration of the trendline, same abrupt downturn. As you can see, while the "noise level" on the chart is increasing, Gold has spent most of the year to date trading in a pretty narrow range between $US 420-430. It's still there.
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.
On June 16, the spot future Gold price bolted $US 7.10 higher to close at $US 436.20. That move turned UP the $US 5 x 3 Gold chart, precisely one month after it had turned down.
Gold then breached $US 440 on June 23, precisely the same level which confirmed the bull market on the chart way back in November last year. And now, with the $US 13.20 fall on July 1 and 5, the day before and the day after the July 4 holiday weekend, Gold has turned down again on the chart.
On an equivalent Gold in Euros chart, a Gold close of Euros 365 has now been reached, confirming a new leg in the Gold bull market. Gold closed at 366.90 Euros on June 23. On the $US 5 x 3 chart, Gold is back in its ever narrowing "distribution zone". It will take another close of $US 440 or higher to turn the chart up. On the downside, a break below the distribution zone would come on a spot future price close of $US 415 or lower.