Gold has traded above the $US 800 level for a full week (six straight days actually) for the first time ever. The spot future (December) contract hit an intraday high of $US 847.50 on November 8. That's just under $US 30 below the all time intraday high of $US 878 it hit on January 21, 1980. The spot future close of $US 837.50 reached on November 8 is $US 12.50 below the all time high close of $US 850 also set on January 21, 1980.
Here we are, then, at the last "resistance point" for $US Gold. It is a telling fact that Gold has reached this level a whole month after the $US index (USDX) dropped below its previous post-1973 all time low. There is still a large "vested interest" out there in the financial and banking establishment concentrated on "blunting" the Gold price rise to the extent they are capable.
But that task is becoming more and more difficult as the pressure on the US Dollar increases and as the fragility of the debt based global monetary system is being illustrated daily by the plight of the commercial banks. This week, in the wake of the resignation of the CEOs of two of the largest New York money centre banks last week, Britain's third largest bank was hit hard. On November 9, shares of Barclays Plc were "temporarily" suspended after the stock fell 9.1 percent in trading. The speculation is that Barclays, like Citigroup, Merrill Lynch et al, faces a HUGE write down in the value of its assets.
Here are the relative performances of $US Gold, the $US Index, and the Dow since Gold broke above $US 300 to stay on March 27, 2002:
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The USDX has now closed below the vital 80.00 level since September 7 and fell to the lowest point in its history - going all the way back to March 1973 - on November 2. The USDX fell another 0.90 points this week. Gold prices have now remained above the previous ($US 721.50) bull market highs they set back in May 2006 since September 19. This week, the spot future Gold price got within $US 12.50 or about 1.5 percent of its all time high.
As you can see on the daily bar chart, the $US 17.40 Gold price fall on October 2 brought the price back below the shorter-term (10 day) moving average (MA). From there, Gold has gone straight up well over $US 100.00. Gold has now closed above the $US 800 level for six straight days.
On the weekly bar chart Gold had been in a $US 645-690 trading range for the whole of 2007 until early September. 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. Gold closed above the $US 800 level for the first time in this bull market on November 2. On the week ending May 12, 2006, just before the big May/June correction of that year, the Gold price close ended the week $US 101 above its ten-week moving average. The gap on November 9, 2007 was $US 77.60.
The point and figure chart here shows starkly the almost exactly $US 100 upmove on Gold - without a single correction. We got the correction with the $US 17.40 fall on October 2. Since then, with a couple of small "consolidations, Gold has continued to rise substantially, now nearing $US 840.
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 rose almost $US 100 in a straight line with no corrections whatsoever.
Before the present run up, Gold's 2007 high 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.
The spot future price broke above that $US 690 level in early September went on to breach the $US 745 level with its close on October 1. And then, we had a downturn on the chart with Gold's close below $US 730 on October 2 and 3.
Then, two weeks ago, Gold closed above $US 760 on October 18 and 19. This is three clear "Xs" above the previous high and produced a HUGE breakaway gap, by far the biggest in the whole history of the current bull market stretching back to 2002. Since then, Gold has simply continued to rise on the chart, rising to and above the $US 800 level on November 2 and now, at $US 835, only 3 "X"s below its 1980 all time high.
What the breakaway gap makes us CERTAIN of is that the next upleg in the post 2002 $US Gold bull market has been completely confirmed. The US Dollar is at all time lows. Gold in US Dollar terms is not - yet - at all time highs. It will be at some point during this new Gold bull market upleg. And at the rate is is now climbing, that point might not be too far away. At the rate Gold rose this week, it could happen next week.