On Friday, December 14, the spot future Gold price rose $US 4.10 to close for the week at $US 278.00. This is Gold's biggest one-day rise since September 14 - when Gold had its first chance to react to the events of 9/11. It is spot future Gold's highest close since November 14, when it was heading down towards its December 10 low of $US 272.20.
Now, look at the charts to the left. All three has improved MASSIVELY. On the daily bar chart the shorter-term (20 day) moving average(MA) is back above the longer-term (40 day) MA - a prerequisite for any concerted upmove. The Gold price has, of course, spurted above BOTH MAs.
The weekly bar chart is even more encouraging. After threatening to drop below the uptrend line on this chart, Gold is back firmly above it. And after threatening to drop below the longer-term (40 week) MA, Gold is back well above it and only just below the 20-week MA. On this chart, Gold's post May 2001 uptrend has been confirmed.
Finally, there is the Point and Figure chart. See how the uptrend line has been confirmed with the upturn produced by the $US 4.10 price increase on December 14. Not only that, the upturn has given us a double bottom on the chart at the $US 273 level. The old adage about double bottoms on point and figure charts is that the earlier in a move they occur, the stronger the support they give for future upmoves.
Now, take a look at the longer-term Weekly bar chart. Gold has had two "spurts" this year. The May surge took the spot price up to $US 287. The September spurt took it higher than that - up to $US 293. There may not be time for another spurt in the nine trading days left in 2001, but if there is, then Gold has every chance to test $US 300 before the end of the year.
But it doesn't really matter whether Gold spurts again THIS year. Technically, the charts are all pointing towards another upmove, whenever it occurs. Since the Gold price in $US has vastly outperformed U.S. stock markets this year, patience should not be too difficult to find.
The U.S. Dollar is starting to show serious signs of weakness, except against the Yen. The Japanese are being "urged" by Washington to "devalue" the Yen by buying U.S. Treasuries. SOMEONE had better start buying Treasuries, they have had an absolutely HORRIBLE month - made more horrible in recent days by the $US weakness. Foreigners hold $US TRILLIONS in Treasury paper and are taking a bath on these "reserve assets".
The CASH Euro makes its debut in two weeks and already, there are line ups outside European banks to get some. Contrast that with what is happening in Argentina, where there are line ups to get hold of Pesos too. Don't forget, the Argentinian currency is still "pegged" to the U.S. Dollar. The difference is that the Europeans want to hold their Euros. The Argentinians want to get rid of their Pesos on anything they can find to buy.
In this scenario, and with the U.S. economy itself continuing to worsen, Gold is straining to rise. We do not believe that the dam can be kept closed much longer. And technically, the picture is PERFECT. Stay tuned!