This week saw the biggest announcement yet as the Fed let it be known that it was teaming with the other major Western Central Banks to invent a whole new way of attempting to "reliquify" the system. That was the day after the FOMC met and lowered official US rates another 0.25 percent - as much as they dared.
Every time a US official announces yet another plan, the Dollar rises and Gold falls. Mr Bush's latest "plan" announced last week led to a big US Dollar gain. The co-ordinated Central Bank plan announced on Dewcember 12 led to an even bigger US Dollar gain, and once again the Gold price fell back below the $US 800 level with a rush, giving up just over $US 20 on December 13 - 14.
Yet on the week, Gold hardly moved at all - see the weekly Gold chart on this page.
Here are the relative performances of $US Gold, the $US Index, and the Dow since Gold broke above $US 300 to stay on March 27, 2002:
|
The USDX has now closed below the vital 80.00 level since September 7 and fell to the lowest point in its history - going all the way back to March 1973 - on November 22. Gold prices have now remained above the previous ($US 721.50) bull market highs they set back in May 2006 since September 19.
Last week, Gold gained $US 19 on the first two days of the week and retained those gains until Friday, when it fell back below the $US 800 level. This week was very similar. Gold gained $US 17.00 in the first two days of the week but then fell away again as the week drew to a close. On the daily bar chart, you can see that the 10 and 20-day Moving Averages (MA) remain locked together just below the $US 800 level with the Gold price having closed below both, just as it did last week.
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. Since then, there have been two attempts to challenge the old $US 850 high, both of them falling short and correcting. This week, the spread between the Gold price and the shorter-term (10 week) MA has been all but erased due to the $Us 20 fall on December 13-14.
For the past four weeks in a row, Gold's intraday lows have been right on that 10-week MA.
On the point and figure chart, Gold remains in a fairly large distribution zone about $US 20 each side of the $US 800 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:
|
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 835, only 3 "X"s below its 1980 all time high.
That's when the Gold price started getting "volatile" - in both directions. Last week, we had yet another upturn on the chart when Gold rose $US 13.00 on December 4 to close above $US 800 again. This week, we have had yet another downturn on the chart when the Gold price fell $US 20 on December 13-14.
The BIG distribution zone is coming to a point. The price will have to break out of it soon. The only question is, in which direction?