Last week, on September 19 - the day after the Fed's rate cuts - the spot future $US Gold price close broke through to a new bull market high. This week, Gold has tacked on another $US 10.70 on the upside, almost all of that rising coming on September 28. On the same day, the USDX ($US Index) fell 0.62 points to break below the 78 level on the index (spot future closing level) for the first time EVER.
Even the mainstream financial press is starting to notice the inexorably Gold price rise, with lead stories on CNNMoney, Blooomberg, Reuters, and even Yahoo on September 28. Most of them "blamed" the Gold price rise on the US Dollar fall, of course. And many of them took care to gather quotes from "analysts" which said, in effect, that Gold was rising too far too fast and was therefore "risky".
Strange, on second thought, not so strange, that these same analysts have never once since the USDX bear began nearly six years ago said anything about the "risk" of holding US Dollars.
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 USDX has now closed below the vital 80.00 level for three full weeks and has now fallen to the lowest point in its history - going all the way back to March 1973. Gold prices have now broken $US 20 plus above the highs they set sixteen months ago in May 2006.
There is not much to be said about the daily bar chart. The two (10 and 20-day) moving averages are now on a steep upward "railroad track" with the shorter-term MA above its longer-term counterpart and the price above both. This is classic bull territory, hardly surprising given the new bull market highs set last week and improved upon this week.
On the weekly bar chart Gold had been in a $US 645-690 trading range for the whole of 2007 until three weeks ago. The spot future Gold price closed above $US 700 for the first time since May 2006 on September 7 - the day the USDX dipped below 80.00 - and has remained there ever since. This week we got the new bull market high on the chart. Please note that the shorter-term (10 week) moving average only crossed back above its longer-term (20 week) counterpart three weeks ago on September 7. That's pretty recent on this chart.
The point and figure chart here shows the effect of Gold's inexorable rise since the $US 20 sell-off of August 16. As with the weekly bar chart, this chart has now sliced right through the top of the trading range which had confined the metal throughout the year to date. Now it has sliced through all resistance, having risen $US 92 on this chart without a single correction.
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.
This chart is a superb example of the value of point and figure charts for showing LONG TERM trends in a market. Please note the simple fact that the $US 20 fall in the spot future Gold price on August 16 brought the chart right back to the uptrend line which stretches right back to the beginning of the bull market. Gold turned right there, and has gone straight up ever since.
Before the present run up, Gold's 2007 was just above the $US 690 level. It closed above that level twice, on April 16 and again on April 20. That gave us the double top on the chart.
Now, of course, the spot future price has broken above that $US 690 level and gone on to breach the $US 740 level with its close on September 28. At its present level, the chart is now four clear "Xs" above the former bull market high ($US 720 on the chart) set in May last year.
This brings to a conclusion what we were looking for on this chart three weeks ago:
As you can see, all three of the criteria we set up three weeks ago have now been fulfilled. Gold is now without doubt embarked on a new upleg in its bull market. Hardly surprising, since the trade-weighted USDX ($US index) closed at its lowest level EVER - since its inception at the start of the present "floating currency" era in March 1973 - on September 28, 2007.