Well, things are certainly getting more volatile in the commodity markets, and especially in the Gold market. And it's all happened in November, with a week still to go in the month. From November 9-19, the spot future Gold price plummeted from $US 837.50 to $US 778.00 as another panic rush for "liquidity" took place. Unlike the one in August (when Gold also corrected), this one included the Asian markets.
In the three US trading days since November 19, Gold has turned around and shot upward even faster than it fell. Over those three days (November 20, 20 and 23 with the Thanksgiving holiday on November 22), the spot future price soared $US 46.70, including a HUGE rise of $US 26.10 on November 23. In nominal (not percentage) terms, this may well be the biggest one day move yet over the entire Gold bull market. The biggest one day rise in the big move of April/May 2006 was $US 22 on May 9.
Of course the US Dollar is down this week, with the USDX hitting a new all time low on November 22 when the spot future contract closed at 75.05, but the rise in the Gold price over the week was MUCH larger than the fall of the US Dollar against its major "competitors"/trading partners.
Over those three trading days - November 20, 21 and 23 - Gold regained almost 80 percent of its correction losses.
Here are the relative performances of $US Gold, the $US Index, and the Dow since Gold broke above $US 300 to stay on March 27, 2002:
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The USDX has now closed below the vital 80.00 level since September 7 and fell to the lowest point in its history - going all the way back to March 1973 - on November 22. Gold prices have now remained above the previous ($US 721.50) bull market highs they set back in May 2006 since September 19. Gold has stormed upward this week. Another rise anything like that in the week to come will see the $US 850 high challenged.
As you can see on the daily bar chart, the correction last week saw the $US Gold price fall below both its 10 and 20-day moving averages. This week, the shorter-term average fell below its longer-term counterpart but the Gold price, of course, stormed back well above both. Further strength next week will see the position on the MAs reversed very quickly.
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 23, 2007 was $US 47.90.
Please note also that the Gold price hit its longer-term (20 week) moving average precisely before Gold stormed back above $US 800 this week.
The point and figure chart here shows a genuine correction after an almost exactly $US 100 upmove on Gold - without a single correction. We got the last correction with the $US 17.40 fall on October 2. Now, Gold has made up 80 percent of its most recent correction in three trading days. Resistance on this chart is at the early November highs just below the $US 840 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.
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, just over a month 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. Gold then continued to rise on the chart, rising to and above the $US 800 level on November 2 and then reaching $US 83, only 3 "X"s below its 1980 all time high.
Last week we got the downturn on the $US 5 x 3 chart. This week we got the upturn. On the $US 5 x 3 chart, the high so far in the bull market is $US 835. To put the chart 3 clear "X"s above that and signal the likelihood of an upwards acceleration on the chart now requires a spot future Gold close of $US 850 - or higher. $US 850 is, of course, the all time high spot close for Gold. We're getting VERY close.