For the record, here are the (spot future close) Gold highs on this chart:
Last week saw a universally anticipated rate rise in Australia, a grudgingly anticiapted rate rise in the European Union, and a totally UNANTICIPATED rate rise in Britain. This week saw rate rises in several Euro member eastern European nations. And of course the Fed met and DIDN'T raise rates.
They couldn't. Wall Street had already bet on a rate pause and besides, the FOMC met in the middle of a US Treasury three-day refunding auction. As a result, the US Dollar is UP this week, and Gold down of course. This is not because of the Fed, it is because of the terrorist scare thrown into the mix my UK "authorities" on August 10.
The Gold price tumble came in New York almost in lock step with the UK announcement. It carved more than $US 15 off the spot future Gold price and more than $A 20. It also deep sixed the $US oil price, allowed the Treasury to complete the last day of their refunding auction in fine style, and turned a faltering US Dollar up substantially on the forex markets.
For anyone who has to fly for any purpose, and especially for business purposes, the draconian new restrictions on what can be carried aboard and the "tightened" security procedures are going to prove a nightmare for a probably extended period. How long the latest terrorist scare acts to the benefit of the US Dollar, and to the detriment of gold, silver, oil et al, remains to be seen.
(Chart appears here in original analysis)
As you can see, the $A has moved very little against the $US on a week to week basis this week. That wasn't the case up until August 10. Before the announcement of the UK sting operation on the terrorist plot was aired, the Aussie Dollar had climbed above $US 0.77 for the first time since mid May (when Gold was hitting its 2006 highs in $US terms). The recovery of the $US on the foreign exchange markets after the UK announcement pushed the Aussie back down to close the week with a very small gain.
When the Reserve Bank of Australia (RBA) raised Aussie rates on August 2 - by 0.25% to 6.00% - it was the first rise since March. Even so, and even though the rate rise was universally anticipated, it has caused howls of protest, especially from Aussie mortgage holders, most of whom hold adjustable rate mortgages.
When an 0.25% rate rise can cause such howls of angst, it is a pretty good illustration of how choked with debt the average Aussie "consumer" already is. The outrage is not about how debts are going to be serviced and repaid. It is about the difficulty of maintaining the present "lifestyle" in the face of higher rates. And since the RBA has STRONGLY hinted that there are more rate rises in the pipeline, it will be interesting if the invincible Aussie consumer finally pulls in his and her horns.
At the beginning of July 2002, the Australian Stock Exchange (ASX) discontinued most of its old stock indexes. Amongst these discontinued indexes is the Australian Gold Index (XGO). The Privateer has compiled our own Aussie Gold index. Here is an explanation of the index - here are links to charts.
The XGO temporarily exceeded its early February highs, going on to close just above the 3000 level on April 20 and again on May 1, but then fell below those levels again.
Finally, the XGO decisively broke through to new highs, closing as high as 3101 on May 11 (with Gold closing at $US 721 that night in the US). This close definitely confirmed the next upleg on the Aussie Gold stock bull market.
That was back in mid May. Since then, the XGO plummeted from 3101 on May 11 as low as 2267 on June 14. On August 11, the XGO closed at 2567. That was actually up one point on the day after Gold fell $US 15 plus and $A 20 plus. Clearly, local Gold stock traders took this Gold price fall with a grain of salt. On the week, the XGO gained 29 points or a little over 1.0%.
This is the daily XGO bar chart
(Chart appears here in original analysis)