The low on $US Gold's most recent correction came on July 19 when the spot future price closed at $US 420.20. The next day, July 20, China announced the end of its ten year plus policy of fixing its currency, the Yuan, exclusively to the US Dollar.
There have been fourteen trading days for Gold since July 19. Over that period, the spot future Gold price has only gone down three times, on July 22, July 26 - and August 5. Those Gold "losses" have been $US 0.70, $US 2.40, and $US 0.70 respectively. Over the entire fourteen days, the spot future Gold price is up $US 17.00.
What Gold has done so far since July 19 is to regain (almost all) its 2005 losses. At its close of $US 437.20 on August 5, down $Us 0.70 from the $US 437.90 it closed at on August 4, the spot future Gold price is now $US 1.20 below the $US 438.40 level at which it began 2005.
You can see this slow and steady progress on all the charts on this page, especially on the Daily chart. We have a "buy signal" on the $US daily chart but Gold is right at "resistance levels" on both the weekly chart and the point and figure chart. None of the major effects of the decision to partially "float" the Yuan have yet taken place on US markets - but they will.
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:
|
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 over the period covered by the table, the $US Gold price has gone up a lot more than the $US has gone down on a trade weighted ($US index) basis. And look at the Dow, a mere 1.26% gain to show for nearly three and a half years of trading 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 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 back healthily above the 20-day MA. This chart has "buy signal" written all over it.
This signal is not duplicated 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 well above both its 20 and 40 week MA. All this is positive. But - the longer-term MA is still above its shorter-term counterpart. In addition, Gold has not yet broken decisively above the trendline (dotted red line) connecting previous 2005 highs.
The picture is similar on the Point and Figure chart. Gold has once again confirmed its uptrend line and has now broken above its recent tight trading range. But as with the weekly bar chart, Gold is back to but not yet decisively above the trendline connecting its previous highs. To do that (on both charts), spot future Gold needs to get back above the $Us 440 level. And for the significance of that level, read on.
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:
|
Please note that in percentage terms, the $US Gold price rise is more than double the fall in the $US index.
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.
Ever since Gold broke back below that $US 440 level after having set a bull markt high of $US in early December 2004, that has been THE resistance level.
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. It could not go higher, and corrected down to $US 420.20 on July 19 - turning the $US 5 x 3 chart down again in the process.
And now, Gold is once again challenging that same $US 440 level, closing as high as $US 437.90 on August 4. $US 440 is needed to turn the $US 5 x 3 chart UP again. Above that, $US 455 is needed to equal the December 2004 high and $US 470 - or higher - is needed to confirm the next upleg on the $US Gold bull market.
On an equivalent Gold in Euros chart, a Gold close of Euros 365 has 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 on August 5 at Euros 354.60.