Last week, the spot future Gold price fell $US 0.50. This week, the price rose $US 6.00, almost all of that on August 9 when it rose $US 5.50. The intra-day spread for the week - again on a spot future basis - was high $US 277.10 - low $US 265.90. That's a much "healthier" $US 11.20 trading range for the week, "healthier" because the spot future Gold price is now back well ABOVE the $US 270 level.
The solid support zone for Gold in the mid $US 260s which has been built since the beginning of July has now been confirmed. Consider the slow progress towards this Gold spurt over the last month:
First, look at the weekly bar chart on the left. You can see that the support zone around $US 265 has been building ever since Gold came off its mid-May "spike". You can also see that the shorter-term (20 week) moving average crossed above the longer-term (40 week) one. That happened in the week ending July 13. It took four weeks, but with the $US 6.00 surge of August 9-10, Gold has finally lifted off again.
Take a closer look at the weekly bar chart, and you can see that the support zone in the mid $US 260s is HIGHER than the mid $US 250s support zone that Gold was in before its May "spike". Now,look at the longer-term weekly bar chart. You can see that the building of higher "support zones" which has been going on since last April is NEW. Ever since the big Washington Agreement Gold spike in late 1999, each support zone had been below the previous one.
This "crossover" of moving averages on the weekly chart is VERY important. First, it is a prerequisite for any kind of a sustainable BULL market that the shorter-term rate be ABOVE the longer-term rate. Second, the "crossover" in mid-July is the first time that this situation has been present on the weekly Gold chart since June 2000.
All this is slowly building up against a COMEX where total open interest on all contracts has spent the last three days BELOW the 100,000 level. That has no precedent in well over a decade. On top of that, Gold lease rates have hit their lowest levels of the year especially at the short end. The one month rate was 0.53% on January 4. On August 10, it was 0.46%. Granted, U.S. rates are down by 2.75% from where they were at the start of the year (with more rate cuts expected), but it is clear that there is not much downside on Gold lease rates. Even more interesting, Gold lease rates have been falling all week, even while the Gold price itself has put on its sudden rise.
"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."