Unusually for a week in which the FOMC meets, Gold (and Silver) did not fall in the lead up to the March 20-21 meeting this week nor did they fall in its immediate aftermath. They waited till the end of the week, Gold losing $US 6.90 and Silver $US 0.25 on Friday, March 23.
If you haven't yet read the "press release" which accompanied the Fed's decision to leave official rates at 5.25 percent yet again, please take a look at it. Don't worry, it won't take long to read.
This is undoubtedly the most insipid and weasel worded press release we have seen from an FOMC committee meeting for decades. A doctor who came up with such a mess of verbiage as a diagnosis of a patient would be quickly drummed out of the profession - at least we hope that would be the case. And as for any course of treatment based upon such a diagnosis, nobody would have any idea whether the patient needed a couple of aspirin or immediate open heart surgery.
But insipid as it was, the press release was enough for Wall Street to stage a comeback on the supposition that the Fed is chomping at the bit to get busy doing what they are "supposed" to do and start lowering official US rates again. US stock markets recovered. The $US Dollar index (USDX) rebounded from 2007 lows set mid week. The US Treasury yield curve actually "uninverted" itself, albeit by only 0.01 percent, after having been inverted since mid August last year. And the precious metals fell, if only on the Friday.
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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Despite the rebound after the FOMC meeting, the $US index still lost ground on the week. And despite the Friday sell-off, the $US Gold (and Silver) price was still up on the week.
As you can see on the daily bar chart, the shorter-term (10 day) moving average (MA) has moved up sharply towards its longer-term counterpart this week. The Gold price had risen well above both MAs before the $US 6.90 fall on March 23 brought the close for the week back to just above the 20-day MA. We still await a crossover - shorter-term MA above longer-term MA - as the "trigger" on this chart.
On the weekly chart, the situation is much more clear cut. The Gold price remains above both 10 and 20-week moving averages. The shorter-term average remains above its longer term counterpart, as has been the case since late last year.
On the point and figure chart, the $US 39 fall on the Gold price three weeks ago the chart a little more than halfway back to the uptrend line established when Gold came off its 2007 lows in late January. As you can see, the trading since then has pushed the chart sideways towards that uptrend line, which now provides powerful support. This week, the chart commenced another upmove before the $US 6.90 Friday fall turned the chart down.
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.
The big Gold price falls three weeks ago brought about the first downturn on this chart since the beginning of January. That one found a bottom just above the $US 600 level. This downturn reversed itself at the $US 640 level. The spot future Gold close of $US 655.50 on March 8 turned the $US 5 x 3 chart up again.
This week, the chart added another "X" on the upside when Gold closed at or above the $US 660 level on March 21 and 22.
Three weeks ago, we had the knee jerk reaction of a flight into government debt paper. Two weeks ago, the US Treasury market suffered its biggest one day sell off so far this year on March 9. For the past two weeks, it was the turn of the US Dollar, with the $US index USDX) falling to new 2007 lows mid week this week before "rebounding" to close at the 83.00 level.