On the weekly bar chart - and on the point and figure chart - support lies between $US 277-280.".
(The Gold Bottom last week - January 18)
On a spot future basis, the intraday low on Gold this week was $US 277.50 set on January 24. The low close this week was $US 278.40 - set on the same day. Gold is back to support as outlined last week. It has not yet broken BELOW that support, despite a HUGE rise in the $US on Friday, January 25. On that day, when the $US Index rose 1.22 points or over 1.0%, spot future Gold stopped a week of small losses by rising $US 0.70 on the day.
On the daily bar chart, Gold has dropped below both its 20 and 40 day moving averages. However, the shorter-term average remains above the longer term one. On the weekly bar chart and the point and figure chart, Gold has merely returned to its uptrend line. On the weekly bar chart, the present Gold price remains about mid way between its 20 and 40 week moving averages.
The recent (small) falls in the $US Gold price began on January 17, the day after the latest (and second last) Bank of England Gold auction. The fall stopped on January 25 - the day that the $US index suddenly took off, rising by more than 1.0% to its highest level since July 2001. Why, did the $US suddenly take off. Well, Mr Greenspan told the Congress that a U.S. economic recovery was "closer than they throught" and might prove to be more robust than is generally expected too. Well, he WOULD say that, wouldn't he?
The Gold uptrend is intact. The Gold price has retreated back to its trendline for the third time since the trend began in April 2001. Two weeks ago, Gold gained $US 8.50. Last week, it lost $US 4.30. This week (Jan. 21-25) it lost another $US 4.30. The net result is that Gold is $US 0.10 lower than it was three weeks ago on January 4.
In fact, Gold's gain in $US terms so far in 2001 has been exactly $US 0.10. Over the same period, the $US (as measured by the $US Index) has risen by 2.97 points or 2.5%. Gold is thus far keeping very tight pace with the U.S. Dollar. The U.S. Dollar is rising against every other currency - except the ones which are still "pegged" to the Dollar.
How long this situation will continue is impossible to say. It is true that technically, $US Gold is down to a very important support level. Any further weakness, especially any spot future close below the $US 275 level, would breach the post April 2001 uptrend. It is also true that the $US Index is (almost) back to the multi-year highs which it set in July 2001.
Up until January 17, the U.S. Dollar and the U.S. Dollar Gold price were going up together. Between January 17 and January 24, the $US continue to rise slowly while Gold began to give up ground in $US terms. On January 25, the rise of the $US GREATLY accelerated, while Gold stopped falling - at its support levels - and began to rise again even against a newly-rampant $US.
What we have NOT yet seen this year is Gold rising against a FALLING U.S. Dollar. That's the third possibility, and the one to look out for. What we are waiting for now, though, is to see whether Gold can maintain its $US uptrend intact while waiting for the $US to begin to fall. If it can, and it has so far, then it is "coiling the spring" just waiting for the $US to stop rising and start falling. The first chance for that will come on January 30, when the FOMC announces whether or not they have decided to lower U.S. rates yet again. Stay tuned.