Marvellous, isn't it? The FOMC meeting this week was a "two-dayer" over June 27-28. June 26, the day before the meeting, the spot future Gold price duly lost $US 9.20 to close at its lowest level since January 22 and all but come back to its level at the start of the year. Gold closed on the day at $US 642.10 and then dropped another $US 0.40 the next day to $US 641.70. By the end of the week with the FOMC meeting safely "negotiated" the spot future price was back up to $US 650.90.
Here is what we said last week regarding the "seasonality" of the Gold price:
"If Gold is going to perform as it usually does seasonally, it should start to move up sometime between the middle of next week and the end of the first week in July. Seasonally, Gold's worst times of year going back decades have been early-mid May to late June - early July and late September - early October to mid-late November. We think that an upturn, if Gold is going to conform to its seasonal norm, will probably be delayed until after next week for the simple reason that the Fed's FOMC meets next week (on June 28-29) to decide on US interest rates."
While Gold did turn around fairly abruptly late this week, we haven't yet got any kind of "upturn". On the week, the spot future price was actually down $US 2.60. What we did get on June 28, which also happened to be the end of the spot future month, was a sharp drop of almost 38,000 contracts in the open interest on the Comex. We got an even bigger one at "expiry" in May, which was also a down month for Gold. But in April, when the Gold price was up fairly substantially on the month, the open interest hardly budged.
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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After managing to exceed it for most of the past month, the percentage rise on the Dow in this table is once again slipping further and futher behind the percentage FALL in the $US index over the same period. Please note that the $US index fell 0.41 to 81.69 on June 29. That's its lowest close since May 2 and only 0.44 points above its 2007 low of 81.25 set on April 27.
This week with the spot future Gold price briefly dipping into the low $US 640s, the shorter-term (10 day) MA remains firmly below its longer-term (20-day) counterpart on the daily chart. As you can see on the chart, the trading on June 20 (Friday) was all done between the two MAs. For Gold to rise back above its two moving averages, a close of $US 655.00 or better is required.
On the weekly chart, the shorter-term 10 week MA has been above its longer-term 20 week counterpart since late last year. At least it was up until the end of last week. This week, the shorter-term MA has dipped below its longer-term counterpart for the first time this year. At present levels, the spot future Gold price is $US 13-15 below the two MAs. To get back above them, Gold is going to have to rise into the mid $US 660s over the next week or two.
The situation on the point and figure shows clearly how hard the Gold price has been pushed down since it hit $US 690 twice in April. The first and most obvious feature is that the Gold price has now fallen BELOW the uptrend line on the chart. Please note that this uptrend line does NOT stretch back to the beginning of the Gold bull market but it does stretch back to August/September last year. Gold continues to distribute below this line, the latest move on the chart being upwards back to the $US 650 level.
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 in early March brought about the first downturn on this chart since the beginning of January. The January downturn found a bottom just above the $US 600 level. The March 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.
Then, Gold closed above the $US 690 level twice - on April 16 and again on April 20.
Since then, Gold fell as low as $US 653.30 on May 24 only to reach the $US 670 level on June 1 and turn up again. Then we had another DOWNTURN on the chart due to the $US 14.60 fall on June 8. The close below $US 645 on June 27 added another "O" to the chart this week. An upturn requires a spot future close of $US 660 or better.