This was a shortened week for Gold trading in the US with the Comex market closed on November 24-25 for the Thanksgiving holiday. On November 23, the spot future Gold price closed for the week at $US 492.30. By November 25, the London PM Gold fix was up to $US 495.90. Remember, this is a SPOT Gold price, not a spot future price. The equivalent on the spot future Comex market would have been in the region of $US 497-98, if the Comex had been open.
As you can see on the charts, the $US 500 level is getting tantalisingly close. This is, of course, looked upon as a big psychological hurdle for Gold to surpass, as were the $US 300 and $US 400 levels before it. Gold has been in a trading range between $US 300 and $US 500 for most of the past twenty-four years.
Right now, financial markets especially in the US are skewed severely. US stock markets have been rising steadily for the past two months or so. The US Dollar itself is no longer rising, but is still very close to 2005 highs and is more than 13% above the level at which it began the year on a trade-weighted ($US index) basis. And US Treasury markets too have now seen yields stabilise after big rises in October, early November.
Normally, these developments do NOT go hand in hand with an inexorably rising $US Gold price. Yet they are. Something has to give, and the financial asset community are hoping fervently that it will be the $US Gold price, especially at or about the $US 500 level.
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 nearly triple the $US fall on a trade weighted ($US index) basis.
On the daily chart, the $US 16.90 of three weeks ago has been blasted out of the water with a US 35.70 rise since November 4. The fall up to November 4 pushed Gold well below both its 10 and 20-day moving averages, the rise since then has had the price soaring back above both and the shorter-term average crossing back above its longer-term counterpart last week and stretching the gap this week.
On the weekly Gold chart, you can see that Gold's two month trading range between roughly $US 460 - 477 was smashed this week with Gold climbing close to $US 490 on an intraday basis on November 18. Gold reached almost $US 493 on November 22 before settling down to wait out the Thanksgiving break.
On the point and figure chart, a new uptrend line has was formed last anchored in Gold's sub $US 460 lows set on November 4. With Gold now above $US 490, the uptrend on this chart has steepened dramatically. And the support points have risen dramatically too.
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 rise in the $US Gold price is well over TRIPLE the fall in the $US index.
As we have been saying since last November, a year ago now, the chart to watch continues to be the $US 5 x 3 point and figure chart. The uptrend line was FIRST 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. That bull market high lasted a little over nine months. Then, by October 11, a new bull market spot future Gold closing high was established when Gold went above $US 475. That re-confirmed the uptrend line on the chart.
On November 4, Gold closed at $US 457.90. That turned the $US 5 x 3 chart down. Please note where the downturn occurred - right on the line connecting the 1983 and 1987 bull market highs.
Two weeks later, the chart has turned up again and has gone on to stand three clear "X"s above its previous high. The previous downturn on the $US 5 x 3 chart took place on July 5, 2005. It took about six weeks, until August 11, 2005, to turn it up again. This "round trip" was done in eight trading days - the shortest of the entire post 2001 bull market so far.
The thing to continue to stress is that the strategic Gold bull market as shown on the $US 5 x 3 chart is perfectly intact with an uptrend line which has been confirmed and RE-CONFIRMED since December last year. AS LONG AS THIS UPTREND LINE IS INTACT - $US GOLD IS IN A BULL MARKET.