Back above the $US 600 level for the first time since September 8, if only for a day. This week, Gold managed to close at $US 605 on September 28, only to slip back below $US 600 at the close of the week (and month) on September 29, losing $US 6.40 on the day to $US 598.60. As you can see on all the charts on this page, however, a support level has been established just below $US 580. Now we need to see how far this downturn on September 29 goes.
As we said here last week, there is still more than a month to go before the US mid term elections so it is too early to say that the $US Gold price has found a "bottom" in this correction yet. Gold did get back above the $US 600 level but has not held there so far.
The big news in investment markets has nothing to do with precious metals, of course. It is instead the Dow getting ever closer to the highs it set way back in January 2000. It seems that the worse the news of a fast slowing US economy gets, the higher US stock markets go. Of course, the approaching US mid-term elections have a lot to do with that as the Republicans and their friends in the US financial establishment strive to prevent the loss of one or both Houses of Congress.
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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Note that Gold's percentage gains are back under 100% on this table. The US Dollar recovered two-thirds of last week's losses this week. And the Dow is hovering just below its 2000 highs.
On the daily chart, you can see that the move up to $US 605 on September 28 pushed the Gold price back above both its 10 and 20-day Moving Averages (MA). Gold closed the week just above the 20-day MA with the 10-day MA once again curving up towards its longer-term counterpart. Any sustained action above the $US 600 level next week will be encouraging. Meanwhile, we have solid support just below $US 580.
On the weekly chart, the 10-week MA crossed below the 20-week MA converged for the first time this year in mid August. Then Gold fell away in early September to fall substantially below both MAs. That remains the case, although the distance is slowly lessening. No substantial upmove can take place until Gold gets back above one, or preferably both, of these MAs.
Last week, we got the double bottom on the $US 2 x 3 point and figure chart at the $US 578 level. This week, we have a reasonable upside move from that double bottom. A downturn on this chart would require a close of $US 598.00 or lower, just below the actual close on September 29. Should we get a downturn, support is, of course, found at the $US 578 double bottom.
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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As always, we refer you to the strategic $US 5 x 3 point and figure Gold chart for an overview on the situation.
Three weeks ago, we had the quickest transition from upturn to downturn in the bull market so far. The $US 640 close on Tuesday, September 5 turned the chart up. That was followed two days later by another downturn as Gold slipped back below the $US 620 level. More recently, Gold has dipped below the $US 580 level twice but rebounded each time.
This week, when Gold closed above the $US 595 level on September 27, the $US 5 x 3 chart turned up again. We are looking at a potentially tight trading range on this chart with resistance at the $US 615 level and support at Gold's recent lows just below $US 580.