In early February, the US Treasury's had its quarterly "refunding" auctions and Gold took a swan dive from the low $US 570s to just below the $US 540 level. Just over a month ago, on February 16 to be precise, the US Treasury's debt subject to limit hit the debt ceiling. Last week, Treasurer Snow informed the US Congress that the Treasury will run out of borrowing capacity by March 20 and on March 2, the spot future Gold price regained the $US 570 level.
Last week, Gold did an almost perfect repeat performance of its performance in early February. And this week, Gold has rebounded to end the week at $US 555.10 - right at the midpoint of what has now proved to be a $US 30 trading range between $US 540 and $US 570. Next week, the US Treasury can borrow again with the passage on March 16 of a new debt ceiling just below the $Us 9 TRILLION level. And next week two other things will happen. First, reported Treasury debt levels will be "unfrozen" and we can get our first glimpse of how much the official debt has grown since the level was frozen on February 16. Then, on March 23, the Fed ceases to report on US Broad Money (M3) numbers.
There is another even "scheduled" to take place on March 20. This is the commencement of trading of the "Iranian Oil Bourse". The latest information we have available points to this commencement being "postponed", by anywhere from two weeks to a year, depending on the person doing the conjecturing.
We can only wait and see.
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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Please Note: Over the past week, the $US index has dived by 2.35 points or 2.59%. The spot future $US Gold price this week is up $US 13.80 or 2.55% - and almost perfect mirror of the fall of the $US.
On the daily chart, you can now see the shorter-term 20 day moving average snaking above and below its longer-term 20 day counterpart on a weekly basis. This is in itself an indicator of a developing trading range. Also, note the Gold closed right in the middle ($US 555) of the $Us 540-570 range this week and right on its longer-term 20 day moving average.
On the weekly chart, the Gold price has regained its shorter-term (20 week) moving average this week after having dived below it last week for the first time since last October. The developing trading range which is now almost two months old is well depicted on this chart.
The situation on the $US 2 x 3 point and figure chart is very clear. The current correction is almost identical to the previous one and has found support almost exactly where the previous one did. We have had the upturn this week which signalled the $US 30 trading range between $US 540 and $US 570.
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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You can see the abruptness of Gold's recovery from its mid-December and mid-February corrections on the strategic $US 5 x 3 point and figure Gold chart. But now we have another correction with a difference. This time, Gold has turned down on this chart from the same level ($US 570). That gives us a double top on the chart.
The top of the trading range is well established by the double top at $US 570 on the strategic point and figure chart. But the bottom of the range is not yet firmly established because the chart has not yet turned up. Since Gold did not close at or below the $US 540 level during its recent correction, it would take a close of $US 560 or higher to turn the strategic chart up again.