On Friday, March 1, spot future (April) Gold closed at $US 298.40, up $US 1.30 on the day. The intraday high on March 1 was EXACTLY $US 300.00. Here we go again.
As you can see on the daily bar chart, the shorter-term (10 day) moving average has dipped below the longer-term (20 day) one. The last time that happened was in late January, just before Gold bolted upwards from the high $US 270s to just above $US 300.
On the weekly bar chart, you can see that Gold is more or less exactly back to where it was two weeks ago. Remember last week (Feb 18 - 22) was marked by the out of context comments of Bundesbank head and ECB memeber Ernst Welteke regarding the "possible future" Bundesbank sale of Gold. This week, the Bundesbank issued a statement saying they had no "immediate plans" to sell Gold, and Gold bounced right back up to $US 300 again.
Finally, there is the $US 1 x 3 point and figure chart. This is the most interesting of the three, by far. First, note the SOLID uptrend line - the green line. Second, note the line drawn through Gold's two previous highs (in May and September 2001). You can see that the present upmove broke above that line, then fell back into the channel. Now, Gold is right at the line. On this chart (don't forget, it is plotted on CLOSING prices), the BIG number is $US 306. Any spot future Gold CLOSE of $US 306 or higher would produce a "breakaway gap" on this chart.
On top of that, Gold would have room to consolidate ABOVE $US 300. We are still waiting to see that happen as FINAL confirmation that Gold is no longer in a bottom formation but in a BULL market.
"In this context, it is notable that the last TWO major Gold bull markets (1985-87 and 1993-96) both began in March. Seasonally, mid March to mid May is often a very good period for both Gold and Gold stocks."
(The Gold Bottom last week - February 22)
Here we are in March, with spot future Gold having hit $US 300 on the nose during trading on the first day of the month. Don't forget, next Tuesday (March 5), the Bank of England (BoE) holds the LAST of the Gold Auctions they have been conducting ever since July 1999. July 1999 was the BEGINNING of the present Gold bottom. One thing we are certain of is that the BoE will NOT want to have to annouce a plus $US 300 settlement price at this LAST auction.
When the Bundesbank's Mr Welteke made his statement about Gold last week, there was a lot of conjecture that the Bundesbank might be about to take over from the BoE as the Central Bank charged with "controlling" the Gold price. The Bundesbank has said no, at least not in the "immediate future".
Right now, Wall Street is "convinced" that the U.S. recession is "over". The latest "revision" of fourth quarter 2001 GDP growth (from +0.2% to +1.4%) coupled with a plethora of increased factory production and consumer spending data which was released on March 1 have combined to push the Dow back firmly into its 10000 - 11000 trading range. On March 1, the Dow closed up 263 points to 10368, its highest closing level since August 2001.
U.S. investors are STILL not looking at Gold, not as long as the stock markets look promising. But even with that, Gold is once again hovering around its post 1997 resistance at $US 300. Sometime in the NEAR future, the U.S. Congress is going to have to raise the U.S. Debt ceiling, something they have not done since - 1997. This, and/or anything that puts a dent in Wall Street's new found "confidence" could be the factor which finally springs Gold above $US 300 for the LONG TERM.
We are right at the starting gates one more time. We don't expect to see spot future Gold above $US 300 on a spot future basis before the BoE Auction on Tuesday. If it DOES attain that level, it would be a VERY bullish sign. We do expect further efforts (like the Welteke quote) being resorted to to keep the price at or below $US 300 as long as possible. We don't know if these efforts will be successful.
Please stay tuned to this page. We plan to update it mid-week when the results of the last BoE Gold auction is known.