As we have been writing about for the last two weeks on our $A-$US Gold comparison page, $US Gold has been searching for support at or just below the $US 280 level. As you can see from the charts on the left, it is well on the way to finding that support.
The uptrends on the weekly bar chart and the point and figure chart (to the left) are still perfectly intact. On the weekly bar chart, Gold has turned right at its shorter-term (20 week) moving average. And there is an upturn on the point and figure chart. For the longer-term outlook, see this weekly bar chart.
Thus, the uptrend remains intact, but the pace of the "advance" is, to put it politely, a bit like molasses flowing. This week, spot future Gold on a closing basis is up $US 2.90. It's intraday trading range (intraday high to intraday low) for the week has been $US 3.80 (high $US 282.30 - low $US 278.50).
The "pre 9/11" spot future Gold close of $US 272.30 is becoming more and more important. On the point and figure chart, the uptrend line is right at that level. On the weekly bar chart, the longer-term (40 week) moving average is just below $US 272.30 and will move up towards that level in coming weeks.
We can continue to say, as we did last week, that as long as spot future Gold closes at or above that $US 272.30 level, the uptrend which is now nearly seven months old (it began in April 2001) is still intact. Yes, Gold is moving very slowly in $US terms. Yes, Gold is still well below the crucial $US 300 level. But slow as it is, it has still outperformed most other investment "classes" (notably stocks) for the best part of the past two years.
It is not unusual for "bottom formations" to last a long time. It took the Dow seventeen years - until early 1983 - to confirm a new bull market after it first closed at the 1000 level in 1966. Gold hit "bottom" at $US 252 in August 1999 and then hit almost the exact same level ($US 255) in April 2001. It has not traded consistently above $US 300 since November 1997 - four years ago.
To confirm a new "bull market", Gold is going to have to trade consistently above $US 300 again. That is what we, like you, are waiting for.
When will Gold do this? There is no way of knowing. Predicting the future can be a lucrative pastime. If it were not, there would be no astrologers, tarot card readers, soothsayers, and "market gurus". But the business of predicting the future is only lucrative for those who manage to get paid to do it, not to those who pay them for their predictions.
The first tenet of any rational approach to either economics or the examination and analysis of financial markets can be summed up in four words: THE FUTURE IS UNCERTAIN. We cannot know WHEN something will happen. We can know that as long as an uptrend remains intact, the price of the asset in the uprend will go higher.
The uptrend in Gold IS intact, and has been for seven months. At some point in this uprend, as long as it does remain intact, Gold will penetrate above $US 300. That could happen next week, or next month, or next year. But as long as the uptrend remains intact, it WILL happen.
In the meantime, watch the uptrend. The saying "The trend is your friend" is just as true in Gold as it is in any other market. As long as the Gold bottom, and the uptrend, is intact, waiting for the Bull market is a painless exercise for us, and should be for you too.