Meanwhile, Gold is nearly at the bottom of its uptrend. Support "should" be found between present levels and the pre 9/11 levels of $US 272-73. Will it? All we can do is wait - and watch."
(The Gold Bottom Last Week - November 16)
Is the $US Gold price at an important technical support point. In a word - YES - as the weekly bar chart and point and figure chart to the left should make abundantly clear.
After having traded in the $US 290s for a month, and then in the $US 280s for another month, Gold has now come (almost) all the way back to its pre 9/11 level. Gold closed on November 23 at $US 273.10. It's pre 9/11 close was $US 272.30. There is less than $US 1.00 in it. We are back to where we started.
Actually, not quite. In the aftermath of 9/11, the spot future Gold close got as high as $US 293. That was higher than the $US 287.90 high which Gold reached during the May "spike" and so gave us the uptrend which is still intact. As long as it IS intact, then Gold has the potential to mount another attempt at $US 300 at any time. It "should" start at its present levels, all technical indicators say it will.
If the charts to the left showed anything else but GOLD, no trader in his or her right mind would be thinking of shorting it. But this IS Gold, and not only are they thinking about it, many U.S. funds HAVE been shorting it - up until about a week ago. The short intrest is definitely lagging again now.
On top of that, Gold lease rates are slowly but surely rising, making the "Gold carry trade" less and less attractive. It is true that Treasuries (except at the "cash" end) are rising too, but if that keeps going, it will not revive this "carry trade". Instead, it will increase the doubts in more and more minds about the future of market rates and it will also increase doubts about the true "safe haven" status (or lack of same) of Treasury debt.
Stock markets are still recovering, blandly ignoring the carnage on bond markets. The Fed has little if any scope for further rate cuts without undercutting the entire Treasury bond secondary market. Anything could happen at any time in the lead up to the next FOMC meeting on December 11. The investment world is overdue for a crack in the facade of false confidence which now grips it.
For Gold, we have now but to wait and see if the present levels do indeed prove to be the ones at which Gold finds support. Technically, it should. We can but wait and see.