Last week, Gold was up in terms of US Dollars but flat or down in terms of almost all other major currencies. This week, Gold is down in terms of US Dollars but flat or down to a lesser extent in terms of those same other major currencies. The reason, of course, is a "recovery" by the US Dollar, especially on Friday, December 8.
the major Gold fall - down $US 11.80 to $US 630.50 - came on December 6, the day before the European Central Bank did what everyone expected them to do and raised their controlling interest rates by 0.25 percent to 3.50 percent. The other fall this week was even more abrupt. It took place in late trading on Friday, December 8.
In London, the PM Gold fix in London was set at $US 637.40 - up almost $US 10.00 from the fix on the previous day. Then, the US Secretary of the Treasury, Mr Paulson, was quoted as saying that he believed that a "strong" US Dollar was in the "national interest". Presto, Gold closed on December 8 in the US at $US 626.10 - a fall of $US 5.80 from the previous day and a fall of more than $US 11.00 from the PM fix set just a few hours earlier in London.
The US Dollar index (USDX) which was trading at a new 52-week low of 82.38 shortly before Mr Paulsen cleared his throat to speak, ended the day on December 8 up nearly a whole point from that intraday low at 83.30, its highest level since November 27.
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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A grandiose rescue act on the US Dollar. The Fed meets next Tuesday and are universally expected to leave US rates unchanged. And Mr Paulsen and Fed Chief Mr Bernanke head for China next weekend for talks with their counterparts there.
On the daily chart, Gold's $US 18.60 fall this week has pushed the price back below both 10 and 20-day moving averages. The shorter-term (10-day) moving average (MA)remains above above its 20-day counterpart. The daily chart was signalling all systems go last week. Now, the price has fallen below the averages again.
Ironically on the weekly chart this was the week when the shorter-term 10-week moving average almost (but not quite) crossed back above its longer-term 20-week counterpart - for the first time since late July. This will happen next week, barring a MAJOR fall in the Gold price.
On the point and figure chart we have a simple downturn, with no signs of weakness yet. As you can see, the Gold price on this chart remains comfortably above the downtrend line drawn through the May and August 2006 highs.
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.
A month ago, we got a downturn followed by an upturn in the same week on this chart. Last week the chart breached the $US 645 level thanks to the $US 11.40 leap on November 30.
This week, the chart turned down again as Gold fell $US 18.60 on the week to close at $US 626.10 on December 8. As you can see on the chart, the downturn has come after a solid rise from well below the $US 600 level. We are watching now of course for the point where the chart turns up again..
When it does turn up, the important level to watch for is $US 660, three clear "Xs" above its previous $US 645 high.