Exactly one month ago, on February 8, 2002, spot future Gold closed in New York at $US 303.50. On March 4, 2002 - last Monday - spot future Gold closed at $US 297.10. That is almost a month of battling to get through and STAY ABOVE $US 300 - with a short term pullback to the low $US 290s in late February thrown in for good measure.
Now, to be exact, since the London market closed on March 5, the day of the last BoE Gold Auction, Gold has fallen away from $US 300 again. The London PM fix on March 5 was $US 297.80. The Comex Gold spot future close on the same day was $US 294.40. By Friday, March 8, the London PM Gold fix had dropped to $US 289.15. Spot future Gold closed on March 8 in New York at $US 290.30.
You can see the struggle at $US 300 best on the weekly bar chart. Gold has been "flirting" with $US 300 every week for the past five weeks before falling away over the past three days. The uptrend on the weekly bar chart is, of course, still perfectly intact, as is the uptrend on the point and figure chart below it.
On the point and figure chart, you can see that Gold poked its nose above the line connecting the May and September 2001 highs when it hit $US 303 in early February. It then retraced back below the line and then turned up only to stop right on the line. Now, it has retreated to $US 290, right in the middle of the uptrend.
"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."
(The Gold Bottom Last Week - March 1)
We do now. They have been successful - so far. The transformation of attitudes in world investment markets over the past two weeks has been little short of miraculous. Two weeks ago, U.S. investors were starting shying away from the stock market over the "questionable" accounting practices of Enron and many other U.S. corporations. Now, the "confidence" (however misplaced) in a U.S. economic recovery has taken hold.
Interesting, isn't it? Everyone questioned the "accounting practices" of various segments of U.S. industry but NO-ONE questions the "accounting practices" of the U.S. government. The recent resurgence of optimism has all come on the back of government economic statistics, most of them taken out of context.
Growth is up? So it should be, however temporarily, given the amount of "money" the government has been shovelling into the economy through deficit spending. But no one cares HOW this economic and financial massaging is taking place, all they care about is that it seems to be "working", so far anyway.
So, the renewed interest in Gold has died down as the stock markets have surged higher. How long that can continue in the face of the worsening bloodbath on U.S. Treasury bond markets is not seen as being an item of concern. And how long it can continue given the upheaval to world trade that Mr Bush's new steel tariffs will cause is not seen as an item of concern either.
None of us can know how long this new euphoria will last, so none of us can be sure when or under what circumstances Gold will stage another run at $US 300. All we can be certain of right now is that the post April 2001 $US Gold uptrend remains perfectly intact and will stay that way as long as Gold trades at or above the $US 278-280 level. Stay tuned.