Last week, the spot future Gold price rose $US 1.00. This week, the price rose $US 2.60. The intra-day spread for the week - again on a spot future basis - was high $US 271.50 - low $US 267.00. The Gold close above $US 270.00 is the first such weekly close since the end of June. Gold is well on the way to establishing a support point in the mid $US 260s - just like the one it established in early June.
Please check the weekly bar chart to the left. You should be able to see two similar formations. The first is the "double bottom" in the mid $US 250s which Gold established before the May "spike". The second is the "double bottom in the mid $US 260s which Gold established in early June and early July. The other HIGHLY significant feature on this chart is the fact that the shorter-term (20 week) moving average has crossed back ABOVE the longer-term (40 week) moving average.
As we stated here last week, this is the first such "cross over" since June 2000 and only the third since Gold began its present bear market in February 1996 - more than five years ago.
We have the "moving average crossover". We have solid support for Gold in the mid $US 260s. Gold has closed above $US 270 on a weekly basis for the first time in almost a month. The technical picture is improving - slowly, it's true - but it is most definitely improving.
Now, please refer to the longer-term weekly $US Gold bar chart. Please concentrate on the price movement since the "Washington Agreement" spike of late 1999. Can you see that every major support point established after that spike was lower than the previous one - UNTIL THE MAY 2001 SPIKE? Please note that Gold has NOT come all the way back to its "double bottom" in the mid $US 250s set just before the May 2001 spike. Instead, it has established a new "double bottom" $US 10 higher in the mid $US 260s. This is HIGHLY significant.
Gold has been in a very long "bottom formation" ever since it hit its 1999 low point in August 1999. Now, the technical picture - as described above - shows clearly that this long bottom formation is coming to an end. And as you can see on these charts - it is coming to an end in conjuncton with a serious weakening of the $US index chart.
On all markets, Gold, stocks, bonds, currencies, etc, this week has been the "calm" before the G-8 Summit in Genoa. That summit is taking place right now. The U.S. Dollar is not on the "official" agenda, but that is what is being talked about behind (tightly) closed doors.
To find a market so technically poised for an upside breakout as $US Gold is now, you would have to go back to Gold in early 1993 - or the Dow in August 1982. We don't think that the pressure can be diverted much longer. The final signals needed for a $US Gold breakout would be a closing price above the June 26 close of $US 276.20 and/or a turnaround in Gold lease rates - which are back to their lows of the year, especially at the short-term end.