Almost unnoticed amid the torpor afflicting most financial markets at present, the $US Gold price is gradually rising again. There's nothing spectacular about it, but the price increases are slowly accelerating. As you can see on the weekly bar chart, Gold gained $US 4.90 this week. In fact, the Gold price was up $US 5.10 on July 28 - 29, giving the entire gain for the week, and a bit more.
As you undoubtedly know, oil has bounced back above the $US 60.00 level this week. US stock markets are doing nothing at all. Even the US Dollar, in the first week of trading after the Chinese announcement that they were dropping their decade long "Dollar peg" hardly moved on a trade weighted ($US index) basis."
Any alarm bells, muted as they are to date, are coming from the US Treasury debt markets. This week, the yield two-year paper jumped above the 4.0% level for the first time in just over four years. More disquieting still, the yield curve continues to flatten. On July 27, the "spread" between two and ten-year yields hit a new multi-year low of 24 basis points (0.24%). Two years ago, that spread was 276 basis points (2.76%).
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 $US 300 barrier to stay in March 2002 was a "sea change" for world markets, a glance at the percentages in this table should settle the matter beyond all reasonable doubt. Which of the three would you have preferred to own since March 2002?
Three weeks ago, the daily bar chart broke back below both its 10 and 20 day moving averages (MA). Now, that break has been reversed with the price comfortably ($US 5.00 plus) back above both of them . The crossover - the shorter-term MA moving back above the longer term MA, has occurred one more time with the 10-day MA now just $US 0.05 back above the 20-day MA.
On the weekly Gold chart, Gold has once again PERFECTLY comfirmed its uptrend line, just as it did at the end of May. The Gold price is back above its 20 week MA and now just over $US 1.00 below its 40 week moving average. As you can see on the chart, the short-term MA has dipped slightly below its longer-term counterpart.
The picture is similar on the Point and Figure chart. Gold has once again confirmed its uptrend line and has now broken slightly above its recent tight trading range. For most of the year to date trading in a pretty narrow range between $US 420-430. It's still there - right at the top of it.
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. With the $US 13.20 fall on July 1 and 5, the day before and the day after the July 4 holiday weekend, Gold 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. It has since retreated as low as Euros 347.60 before closing the week on July 22 at exactly Euros 351.80. 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.