Last week, the spot future Gold price fell $US 2.60. This week, the price rose $US 0.50 (that's right - fifty cents). The intra-day spread for the week - again on a spot future basis - was high $US 268.50 - low $US 264.10. The weekly "moves" are getting tighter, the weekly trading range is getting tigher. We have almost reached a point of running on the spot.
What HAS changed over the past month is the direction of the $US Index. On July 5, the $US Index established a new 16-year high of 121.21. On the same day, spot future Gold closed at $US 265.80.
Now, a month later on August 3, the $US Index has closed at 116.31. That's a fall of 4.90 points or 4.04%. Gold closed on August 3 at $US 267.90. That's a rise of $US 2.10 or 0.79%. If the rise in the $US Gold price had mirrored the fall in the $US Index, the Gold price on August 3 would have been ($US 265.80 + 4.04%) = $US 276.54
Needless to say, we ain't there. Funny, isn't it. The media wastes no opportunity to ask the powers that be in the Bush Administration about their "strong Dollar policy". No one ever bothers to ask them about their "weak Gold policy".
Two weeks ago, the shorter-term (20 week) Moving Average crossed above the longer term (40 week) Moving average on the weekly Gold chart for the first time since June 2000. That remains the case this week (see the longer-term weekly bar chart here).
We have this "moving average crossover". We still have solid support for Gold in the mid $US 260s - confirmed again this week. We have a slowly sliding U.S. Dollar and a malaise on U.S. stock markets. We still have more than two weeks to wait until the FOMC gets together for their next decision on U.S. interest rates. It might be a good time to take a vacation.
And then again, it might not. Gold lease rates can't go much lower without disappearing altogether, especially at the short end. The one-month rate is now stuck at 0.57% - the only lower rate than that this year was 0.53% on January 4.
Total open interest on the COMEX is threatening to go below the 100,000 level. Our open interest data goes back a decade and we can't find a number that low anywhere. With almost record lows on both lease rates and open interest, Gold activity will either cease completely, or revive.
Once again, as has happened several times since the Gold spike of late 1999, Gold activity and price movement have ground almost to a halt. On every previous occasion, the revival pushed Gold higher. We don't expect the next episode to be any different, especially with Gold having established such SOLID support over the past two months.