So far, the closest that Gold has come to the $US 1000 level is an intraday high of $US 995 on the spot future on March 6. And, as it nears that milestone, the Gold price is getting more volatile. This is completely to have been expected, given the fact that $1000 is "The Last Hurdle" for Gold
Some of the biggest upmoves - and downmoves, we've seen in Gold for a while this week but as you can see on the weekly bar chart, it ended the week all but unchanged. Such was not the case for the US Dollar, though, which kept falling this week to settle at a new all time low of 73.04 on the USDX ($US index) on March 6 and 7. Of course, in the global market for paper assets, the damage is getting worse by the day and the news worse still.
And this week too, further evidence that the global central bank "co-operation" always seen in times of financial trouble, let alone crisis, is a thing of the past. This week, the Australian central bank RAISED its official rates for the second time in a month. And the British and European central banks stood pat. This is going to put IMMENSE pressure on the Fed when the FOMC meets on March 18. They can't afford any more rate cuts, yet they MUST cut rates to keep Wall Street hoping and to prevent the slow and steady slide on the US paper markets from becoming a potential rout.
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 last year and fell to the lowest point in its history - going all the way back to March 1973 - on March 6 and 7, closing at 73.04 points on both days. There are NO support points left on the USDX. There havent been since September last year.
Gold has now spent more than a month well above its previous spot high of $US 850 and has only dipped back down below the $US 900 level on two brief occasions since it first closed above $US 900 on January 14. And this week, spot future Gold traded above $US 995 for the first time on an intraday basis. On a spot future closing basis, Gold got within $US 11.50 of the $US 1000 level on March 5 only to fall back and end the week all but unchanged.
As you can see on the daily chart, the Gold price fell below both 10 and 20-day moving averages a month ago only to turn right around and move above them again. Two weeks ago, the spot future price soared higher and the shorter-term 10 day moving average crossed back above its longer term counterpart. The increased volatility this week is easy to see on the chart as Gold approaches $US 1000. Note that each intraday low was just above the shorter-term (10 day) MA.
On the weekly bar chart, Gold still keeps marching higher on a weekly high low basis. This week, however, the closing levels have been almost the same week on week. That's a marked contrast from the previous two weeks but a development to be expected as Gold nears $US 1000. The 10 and 20 week moving averages are still both moving up in tandem and both are still well below the spot price.
On the point and figure chart, the very steep uptrend line still remains perfectly intact. We can see the first effects of the proximity to $US 1000 this week with the highs getting much closer together as the chart begins to move sideways rather than straight up.
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, which started in September, 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. 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. A month ago, EVERYTHING was broken to the upside with Gold reaching new all time highs in $US terms. And now, Gold has distributed ABOVE its former all time high and gone on to set yet new highs above $US 900. When Gold leaped $US 22.70 on January 28 to close at $US 927.10, it established a LARGE breakaway gap on the chart. Now, that breakaway gap has been validated with Gold rising well over $US 70 over the last three weeks. Only three more "Xs" to go on this chart to the big $US 1000.