This was, of course, the week when the $US Gold price finally exceeded the highs it set back in January 1980 and went on to trade just above the $US 900 level intraday - for the first time ever - on January 11. Not surprisingly, it was also the week when Treasury Secretary Paulson spoke openly about the need to bring in government measures to prop up the "system" as fast as possible and when Fed Chairman Bernanke all but promised a substantial rate cut when the FOMC meets at the end of this month.
Technically, the situation for Gold is now very simple indeed. In $US terms, it has never been this high. That means that in $US terms, there are now NO risistance points left for Gold.
Please note that Gold did not rise more than $US 30 to new all time highs this week because the $US was down, the USDX actually gained on the week. Nor did Gold gain in tandem with a rising $US oil price. Oil fell more than $US 5.00 on the week. Gold went up, in terms of US Dollar and all other currencies, because the "faith" in these currencies declined.
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 now spent an entire week well above its previous spot high of $US 850 and closed this week nearly $US 25 above its previous spot future closing high of $US 873.20. The first full trading week of 2008 has ended with $US Gold at levels never reached before.
With Gold up almost $US 100 since its close on December 20, the 10 and 20-day moving averages (MA) on the daily bar chart have once again turned up with the shorter-term average back above the longer-term one. After bouncing off its 10 day moving average last week, Gold has closed this week almost $US 30 above it.
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. And now, spot future Gold has traded, but not yet closed, above the $US 900 level.
On the point and figure chart, Gold broke above its fairly large distribution zone about $US 20 each side of the $US 800 level just before Christmas. The close above $US 842 on December 28 established a new and much steeper uptrend line on the chart. Now, Gold has gone on to reach decisive all time highs.
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, 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. A month ago, we had yet another downturn on the chart when the Gold price fell $US 20 on December 13-14. And as we said here shortly before Christmas: "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?"
Now, that large distribution zone has definitely been broken - TO THE UPSIDE. And this week. EVERYTHING was broken to the upside with Gold reaching new all time highs in $US terms. At its present level of $US 895 on the chart, Gold is now 5 clear Xs above its January 1980 highs.