Well, we've got the $US 1000 level. Spot future Gold traded above $US 1000 intraday on March 13 and March 14 in the US. And the London PM Gold fix on March 14 was $US 1003.50. We do not yet have either a spot or a spot future CLOSE above $US 1000 in the US though. Spot future Gold closed on Friday, March 14 at $US 999.50. Yes, we hear you say, that might as well be $US 1000. True enough, but it isn't. Not quite - not yet anyway.
Undoubtedly, it will be soon. The Fed literally had to save the US financial system this week when it stepped in with $US 200 Billion worth of bailout assistance for Fannie Mae and Freddie Mac on March 11. It did so again when it bailed out Bear Stearns on March 14. We are now at the point where the Fed is taking almost literally ANY kind of debt paper as "collateral" for ever increasing loans. Homeowners can play "jingle mail" with their houses when the value descends below what is owed against it. The Fed does not have that option in regard to the financial system as a whole, although the same thing is happening there too.
And, of course, the biggest indication of this (besides the Fed's desperate actions) is the plummeting US Dollar and the fact that Gold has now made it to $US 1000.
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. It has continued to fall since then and this fall has accelerated over the past two weeks. This week, the USDX fell 1.37 points or 1.88 percent to 71.67. There are NO support points left on the USDX. There havent been since September last year.
Gold has now spent two months 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 1000 for the first time on an intraday basis.
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. Three weeks ago, the spot future price soared higher and the shorter-term 10 day moving average crossed back above its longer term counterpart. As you can see, Gold broke above its recent "consolidation" area of $US 975-985 this week as it pushed towards the $US 1000 level.
On the weekly bar chart, Gold still keeps marching higher on a weekly high low basis. Last week, the closing levels have been almost the same week on week. This week, Gold has resumed its rise. 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 could see the first effects of the proximity to $US 1000 last week with the highs getting much closer together as the chart began to move sideways rather than straight up. This week, the chart has broken high again.
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. Six weeks ago, EVERYTHING was broken to the upside with Gold reaching new all time highs in $US terms. Then, Gold 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 with hardly a pause from $Us 900 to stand only one "X" below the $US 1000 level. Will that level be reached before the FOMC meeting on March 18, or after?