Spot future Gold closed last week (August 24) at $US 668.00 and didn't do much of anything this week right up until the last trading day before the Labor Day weekend. On August 31, both President Bush and Fed Chairman Bernanke gave speeches attempting to "reassure" global markets and the American people that they had the situation "under control" and that the credit freeze in the financial markets would not impact the so-called "real" economy.
US stock markets were "reassured". The Dow was down 100 points plus in early trading on the day but got all of that back by the time Mr Bernanke and Mr Bush had delivered their remarks and closed with a gain of 119 points. Mr Bernanke's remarks, in particular, were almost universally interpreted by all mainstream market pundits as an iron-clad guarantee that the Fed would start lowering "real" (read the Fed Funds rate) US rates on or before the next FOMC meeting on September 18
The looming "problem", however, is that spot future Gold suddenly woke up from its slumber on the day too, rising $US 7.80 to close the week just ended at $US 675.80, its highest level since July 24.
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 Dow percentage gain in this table is again well below the $US Index loss over the same period. The $US 7.80 rise in the Gold price on August 31 was accompanied by a $US index which moved a mere 0.02 points.
Last week, $US 20 Gold price fall on August 16 has been recovered in six trading days. This week, spot future Gold has posted its highest week-ending close in more than a month with the spot future price comfortably back above its 10 and 20-day moving averages. Given flat or higher Gold prices next week, the shorter-term 10 day MA will once again cross above its longer-term 20-day counterpart.
We apologise for the "sketchy" nature of the Daily chart. We have not been getting intraday price quotes (intraday highs/lows) from our data provider in recent days. We hope this problem will rectify soon.
As you can see, the Gold price on the weekly bar chart has poked above its recent trading range this week and has bolted back above both 10 and 20-week moving averages. Gold is now in the upper third of the $US 645-690 trading range it has been in ever since the start of the year.
The situation on the point and figure chart 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. As you can see, Gold is now right back to the top of its recent $US 660-675 trading range.
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 a month ago. The chart turned up again when the spot future Gold price closed above $US 660 on July 9 and reached $US 680 on July 19 Now, with Gold within $US 5.00 of that July 19 level, the chart is once again pointing up. Major resistance remains, as it has all year, at the $US 690 level.