A shortened week in the US this week, thanks to the Good Friday holiday. Gold rose all week, more or less mirroring the falling US Dollar. That lasted until Friday, April 6 when Gold didn't trade (on the Comex at least) and when the US Dollar blipped upward while the US bond market faltered badly on the back of a "good" US employment report. According to the Commerce Department, 180,000 new jobs were "created" in March and the official unemployment rate fell to 4.4 percent - equalling a five year low.
With this happening at the same time as the ramping up across the US of foreclosures, and with sectors like "leasure and hospitality industries" showing large employment gains, it isn't too hard to figure out that a lot of people are looking for and finding second (or even third) jobs to try to keep up with their rising mortgage payments.
We talked about an "eerie calm" on the markets last week. This has largely spilled over into the week just ended as the world still waits to see whether the Bush Administration will attack Iran. As the situation in the US housing market worsens, and the effects spill over into more and more areas of the financial sector (as they already are and will continue to do), the pressure for war as a distraction grows apace.
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 $US index almost but not quite dipped to a 52 week low this week.
As you can see on the daily bar chart, the steady rise since the early March lows has accelerated this week, thanks mainly to the "gap up" $US 8.10 rise by Gold on April 4. The shorter-term 10 day moving average (MA) is comfortably back above its longer-term 20 day counterpart with the spot price now substantially above both.
On the weekly chart, the Gold price remains above both 10 and 20-week moving averages just as it has throughout 2007 to date. Essentially, this chart is climbing slowly but surely towards it 2007 high of $US 687. Above that, there remains the May 2006 bull market high of $US 721.
On the point and figure chart, the $US 39 fall on the Gold price a month ago set up a new distribution area which pushed sideways towards the uptrend line on the chart. Now, the chart has broken above this distribution zone and is forging higher, albeit slowly. Another reconfirmation of the uptrend line on the chart would require a spot future Gold close of $US 692.00 or higher.
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 a month 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 670 level on April 4.
In February, we had the knee jerk reaction of a flight into government debt paper. A month ago, the US Treasury market suffered its biggest one day sell off so far this year on March 9. Two weeks, it was the turn of the US Dollar, with the $US index USDX) falling to new 2007 lows mid week. Since then, everything is "on hold" waiting to see if the US attacks Iran. And through it all, the $US Gold price has been steadily rising.