"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."
(The Gold Bull Market This Week - September 29, 2006)
That was last week. This week turned out to be the first week of the mid-term election campaign as the US Congress went into recess a week early on September 30. Gold (and many other "commodities", notably oil) got blitzed while US stock markets - as measured by the Dow anyway - finally managed to top the highs they set nearly seven years ago in January 2000.
This week, spot future Gold revisited the lows it had set in mid June in its plunge from its mid May highs just above the $US 720 level. The intraday low in June was $US 562.30 set on June 14. The closing spot future low was exactly the same, $US 562.30 set in June 14. On October 4, spot future Gold hit an intraday low of $US 561.00 before closing at $US 562.00. And on October 6, Gold actually dipped slightly lower on an intraday basis, falling as low as $US 560.50. It closed on that day almost exactly $US 12.00 higher, at $US 572.40.
Thus Gold has now done what it was likely it would do when it fell almost $US 20.00 to dip back below the $US 600 level on September 11, it has revisited its June 2006 lows. Since September 11, spot future Gold has only closed above $US 600 once - on September 28 when it closed at $US 605. Now, over the first week of the mid-term Congressional recess, Gold more than $US 30 lower than that.
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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The big change on the data above this week is, of course, the Dow taking out the all time highs it set nearly seven years ago on January 14, 2000.
On the daily chart, you can see that the move up to $US 605 just over a week ago on September 28 pushed the Gold price back above both its 10 and 20-day Moving Averages (MA). This week, of course, the price plunged back below both MAs and below the support zone in the high $US 570s it had built over the past six weeks or so. And as you can see on the chart, the 10 and 20-day MAs are now locked together and following the price down. Note how each time the 10-day MA has curved up and met the 20-day MA on this chart, the Gold price has turned down hard. The price is being very closely "governed" indeed at present.
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. Over the past week, that has happened again, only this time Gold has gone lower to challenge, though not yet fall below, its June lows.
Two weeks, we got the double bottom on the $US 2 x 3 point and figure chart at the $US 578 level. As you can see, Gold has turned abruptly from the $US 605 level it hit last week to fall below that double bottom into the low $US 560s. With the $US 9.00 gain on October 5, we now have a WIDE double bottom at the $US 562 level, hit in mid June and duplicated mid week this week.
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. Now, we have another transition which took place nearly as quickly. The $US 597.60 close on September 27 turned the chart up. Four trading days later on October 3, Gold plummeted $US 21.40 to $US 576.30. That turned the chart down again.
As already stated, Gold has revisited its June 2006 lows this week at $US 565 on the $US 5 x 3 chart. An upturn from present levels requires a spot future Gold close of $US 580 or higher. We'll see what happens next week.