Whups! All of a sudden Gold shoots up almost ten bucks on late trading on Friday afternoon. I wonder why?
"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."
The Gold Bull Market - March 17
Well, the "unfrozen" Treasury debt totals soared $US 93 Billion in three days once Mr Bush signed into law the new debt limit last weekend. And the Fed is no longer reporting M-3. But what woke Gold up was the biggest monthly drop in new house starts in nine years which was reported on March 24.
So, given the fact that we are in a $US 540 - 570 trading range, we have just bolted up into the top third of that range.
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, the Dow was absolutely frozen this week, moving 0.32 points on the week.
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 10 day moving average snaking above and below its longer-term 20 day counterpart on a weekly basis. The $US 9.70 leap on March 24 pushed the chart back up substantially above both MAs. If the trading range holds for a while, the signal of another assault on the top of it will be if and when the 10-day average recrosses above its 20-day counterpart.
On the weekly chart, the Gold price has regained its shorter-term (20 week) moving average last week and remained above it this week thanks to the action on March 24. The developing trading range which is now almost two months old is well depicted on this chart. As long as the spot future price is above both MAs, we are set for a test of the top of the range in the near future.
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. To break out of the trading range on this chart will require a spot future close of $US 578 or higher.
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.
No sooner has the $US 5 x 3 chart developed a double top than it turns up again - with the plus $US 560 close on March 24. The double top on this chart is significant resistance. And break above it - a close of $US 575 or higher - would be a strong signal of an acceleration upward. That signal would be confirmed if Gold could get 3 clear "X"s above the double top, and that would take a close of $US 585 or better.