The most notable event on the Gold market this week was the fact that open interest on the Comex fell about 10000 contracts between August 27-29 - almost all of them being on the short side. Gold had an uneventful time, closing up $US 1.60 on the week at $US 275.10 after having closed at $US 276.10 on August 30.
August 30 was also the day that the Dow closed below 10000 for the first time since last April and the lowest point that the $US index has reached in its recent fall.
The charts to the left are consolidating. Note that the Gold price on the weekly chart came back to touch its shorter-term (20 week) moving average this week and turned up right there. You can get a better picture of this action on the longer term chart here. Note also that the $US Gold price has been trending upward ever since the chart hit its 2001 low back in April. That trend remains perfectly intact.
"The thing to watch for now is if Gold can hold the $US 270 level AND if it can remain above its 20 and 40 week moving averages."
The Gold Bottom last week - August 24
As you can see, Gold has held $US 270 comfortably. We have an upturn on the Point and Figure chart and the major signal, the shorter-term (20 week) moving average being above the longer-term (40 week) one remains perfectly intact on the weekly bar chart.
Outside the Gold market, the gloom is steadily getting worse. The Dow has slipped back below the 10000 level for the first time since April. Summer is now over and the "summer rally" was nowhere to be seen. EVERY major world economy is reporting either "negative growth" or "growth" which can only be found with a magnifying glass. The U.S., of course, "revised" its second quarter GDP down to 0.2% this week (the original "estimate" was 0.7%).
The last thing that is holding the $US Gold price back, by making it very easy indeed to "borrow" gold, are the Gold Lease rates. The LBMA lease rates are falling inexorably with the one month rate BELOW 0.40% and one year rates threatening to go below 1.5%. Lease rates have seldom if ever been lower, certainly not since Gold bottomed in August 1999.
Please don't forget that Gold was forced below $US 300 - for the first time in 12 years - in late 1997, just as the "Asian Crisis" was picking up steam. Now, almost four years later, with recession staring every major nation or group of nations on earth in the face, Gold is still languishing below $US 300.
For how much longer? Impossible to say. We know that the last vestige of hope for Wall Street is a Dow ABOVE 10000. Right now, it ain't above it. We've said it before and we will say it again. Physical Gold is the SAFEST investment media you can find right now. And right now, capital preservation should be the most important goal for ALL investors.