As you can see, spot future Gold has fallen for the third week in a row. The fall is slowing though. In fact, all the "damage" for the week was done on Monday, October 22 when spot future Gold fell $US 4.60 to $US 275.50. Since then, Gold has been climbing very slowly. It closed for the week on October 26 up $US 0.10 at $US 277.90. That's a fall over the week of $US 2.20.
As you can see on both bar charts (daily and weekly), at its close of $US 275.50 on Oct. 22, Gold had given back almost all of its post 9/11 gains. As you can see just as clearly on the weekly bar chart, the uptrend since April 2001 - higher highs and (so far) higher lows - remains perfectly intact
The situation is even clearer on the point and figure chart. Here, Gold has simply retraced its post 9/11 upmove. There has been no damage whatsoever to the uptrend, and the uptrend line remains perfectly intact.
This point is VERY important, especially in the present context. Gold has been in an unbroken UPTREND since April this year. That's more than six months ago. Yes, the uptrend is "gradual". Yes, any "spikes in the Gold price are quickly tamed on the futures markets. But the fact remains that the metal IS in an uptrend.
Please refer to the longer-term weekly bar chart. Look at the trendline labelled "From 1996 high". Note that this trendline was broken by the "Washington Agreement" spike back in Sept/Oct 1999. Now, note that once the trendline was breached, the lows after each Gold upmove kept coming back to the line - from ABOVE it.
That situation persisted until February/April this year, when the spot future price almost regained its August 1999 lows. Ever since April, the highs have been higher - AND THE LOWS HAVE BEEN HIGHER TOO. This is an UPTREND - and of course - that 1996-99 downtrend line has been left far behind.
Anyone who didn't have this chart to refer to could be forgiven for saying "Some uptrend!". And it is true, of course, that at its present level, Gold is only up about $US 23 since the April 2001 bottom. However, that's a rise of 9% in six months, not too shabby on an historical market basis.
But in our modern times, most investors are used to seeing markets move MUCH faster than that, in both directions. To give one example: The Dow hit a low of 8235 on September 21. Five weeks later, the index closed at 9545. That's a rise of 13.7%. Don't forget too, in the WEEK of Sept 17 - 21, the Dow fell 14.3% from 9605 to 8235. In the face of gyrations like this, a 9% rise over six months kind of fades into the woodwork. Not many people, not even many "gold bugs", have really noticed it.
No matter how much or how little "manipulation" is done to any given market, charts don't lie because they can't. The Gold chart reflects actual prices, and in doing so, it is showing a definite and unbroken UPTREND which has now lasted for six months. And that is after a "bottom formation" which lasted for more than a year and a half.
What is needed to turn this uptrend into a "bull" market is the same as it has been ever since late 1997. Spot future Gold must get above and STAY above the $US 300 level. We know this. So do those who do NOT want to see a Gold bull market. So far on this move, before the correction of the past three weeks, Gold hit a "top" on a spot future closing basis of $US 293.30. That's the first goal on the next upmove, whenever it starts, with $US 300 above that.
And on the downside? Spot future Gold closed just before 9/11 at $US 272.30. As long as the spot future close can stay at or above that price, the uptrend is intact. If it goes below $US 272.30, we will have something we have not had so far this year - a higher high followed by a LOWER low. Stay tuned.