Did you notice the London Gold Pool fixes for January 20 on the Gold This Week (GTW) home page? AM Fix: $US 559.25 -- PM Fix: $US 567.25.
Quite a contrast to the $US 554.00 close set on the spot future Comex Gold contract for January 20, isn't it. Please note that in intraday trading, the spot future contract reached a high of $US 568.50. As we say in our main Gold commentary, "the market's getting volatile".
How volatile? Well, over the shortened (four day) week just ended, the spread for the spot future Gold close was $US 14.50 - all of that accomplished on one day - January 19. On an intraday basis, the spread for the week was $US 25.20. That's nearly 5 percent.
As you can see on the chart, while all these gyrations were going on, the actual weekly move on the spot future Gold price was a mere $US 3.00. That's just about the quietest week we have had since the latest acceleration of the Gold bull market got started (from the low $US 460s) in early November last year.
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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On the daily chart, you can see the bigger and bigger intraday swings and the fact that the daily trading keeps bouncing of the shorter-term (10 day) moving average on the chart. It briefly fell below this MA on January 18, the day of the Japanese selloff.
The weekly chart is simply getting further and further above both its 20 and 40 week moving average. This might be an indicator for a "correction", but it must be remembered that Gold had a correction a month ago when it fell from $US 540 intraday to just above the $US 490 level in seven trading days. Corrections (10% plus falls) don't usually come so close together in a bull market - but we'll see.
As already stated, we have discontinued the $US 1 x 3 point and figure chart on this page as being too unweildy. As you can see on the $US 2 x 3 chart here, Gold has not yet decisively broken above the high it set before the Japanese selloff of January 18 (don't forget, this chart is based on CLOSING prices).
Finally, as we said here last week there are NO signs of weakness on ANY of the charts on this page. Nor is there much in the way of "resistance" points, now that Gold has smashed through the $US 550 level. We would see any corrections now, especially on the $US 2 x 3 chart, as the underpinnings for a new and steeper upchannel.
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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Last week,the spot future Gold price has now DOUBLED from its 2002 low. This week, it's fallen just below the 100% gain level.
The spot fuure Gold close peaked in December 2004 in the mid $US 450s and took NINE MONTHS - until mid September 2005 - to exceed those highs. The spot future Gold close peaked in December 2005 at $US 528.40. Less than a month later, it has smashed that 2005 high to ribbons. We do NOT expect a rerun of last year with Gold in the doldrums for the first nine months.
One last measure of the abruptness of Gold's recovery from its mid-December correction can be seen on the strategic $US 5 x 3 point and figure Gold chart. Take a look at the duration of the last two "DOWNTURNS" in the data accompanying this chart. The chart turned down on November 4, 2005 and turned up again twelve days later on November 16. It had its most recent downturn on December 16 and turned up again twelve days later on December 28. By the measure of any of the previous downturns on this chart, the most recent two have been resolved VERY QUICKLY INDEED.
Now, with spot future Gold having neared $US 570 intraday, it has established a new upleg on the $US 5 x 3 chart. This is final confirmation that Gold has consolidated above $US 500 and above its 1981-2005 $US 300-500 trading range. Technically, EVERYTHING is in place for the upwards acceleration of the Gold "price" - in terms of all paper currencies - in the year to come. If the first three weeks are anything to go by, we are in for a fun time this year.