Last week (September 19 - 23) Gold rose as high as $US 469.40 on a spot future closing basis on September 21 before falling back to close the week at $US 463.90. This week, Gold has taken out the BIG one by rising above the $US 470 level (more on this below). The spot future close rose as high as $US 472.30 on September 29 before falling back to end the week at $US 469.00.
As we develop more fully in our main Gold commentary, September has been a "watershed" month for Gold. It has risen substantially against a US Dollar which has NOT fallen. It has thereby signalled the beginning of the next major stage of its bull market by rising substantially against ALL major world currencies over an entire month.
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 over the period covered by the table, the $US Gold price is well over double the $US fall a trade weighted ($US index) basis.
On the daily chart, you can see that the Gold price briefly dipped below the 10-day moving average this week before recovering to close back above it, setting new highs in the process. On an intraday basis, Gold retreated to levels just above its previous $US 456 bull market high - set in December 2004 - before rebounding higher. If this was the "correction", it has been both very shallow and VERY short-lived. We'll see.
On the weekly Gold chart, look at the takeoff which has occurred since the chart dipped back to just touch the confluence of its 20 and 40 week moving averages at the end of August. This came a month after the trendline which has its roots way back in 2001 was confirmed for the second time this year. These are powerful technical signals, and Gold has reacted accordingly.
On the point and figure chart, look at two things. First, look at the upside acceleration since Gold broke decisively above the dotted red line connecting its previous 2005 highs. Then look at the fact that the downturns since then have been increasingly shallow.
As you might expect given the new bull market highs, all three of these charts are unanimous.
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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Please note that in percentage terms, the $US Gold price rise is well over double the fall in the $US index.
As we have been saying since last November, the chart to watch continues to be the $US 5 x 3 point and figure chart. The uptrend line was established on this chart when Gold broke above the $US 440 level in November 2004. In doing so, the Gold price rose to three clear "X"s above its previous (February - April 2004) highs. That established the uptrend line
After that, Gold reached $US 456 in early December 2004. Two weeks ago on September 16, that level was exceeded when spot future Gold closed above $US 460.
Now, on September 29, Gold has closed above $US 470 (at $US 472.30 on a spot future basis). That puts the $US 5 x 3 Gold chart three clear "X"s above its previous (December 2004) bull market high and RE-CONFIRMS the uptrend line established when Gold closed above $US 440 in November 2004. It has taken nearly a year, but the NEXT leg of the $US Gold bull market is now fully confirmed.