"This week, the $US 290 level has held - just. We will see if it holds next week.
(The Gold Bottom Last Week - March 15)
It held all right. We now have SOLID support for spot future Gold at $US 290 - and SOLID resistance at $US 300. That's a $US 10 trading range and Gold has been in it ever since February 11, the day after spot future Gold hit its closing high for 2002 (so far) of $US 303.50 on February 8.
The $US 4.50 "surge" on Gold on Friday, March 22 takes the metal back to the level it was at just before the LAST Bank of England Auction on March 5. YOu can see the action clearly on the daily bar chart to the left. Gold has spent the past two weeks bouncing around in the low $US 290s trying to form a support zone. And now, it has formed it. Spot future Gold closed at $US 290.30 on March 8 and $US 290.10 on March 15 - that's the $US 290 support. Now, it is most of the way back to $US 300 again.
Take a look at the weekly bar chart. You can see that when Gold last "spiked" right after 9/11, it subsequently gave all its gains back and returned to its uptrend line. This time, Gold has NOT given all its gains back. The post April 2001 uptrend line (you can see it clearly on this chart) presently stands just above the $US 280 level. This time, Gold has only come half way back to the line.
Finally, there is the point and figure chart with its uptrend bounded by $US 300 on the top and $US 280 (or so) at the bottom. Look at the May and September 2001 "spikes". Each time, Gold came right back to the uptrend line. This time, Gold hasn't come anywhere near the uptrend line and is again poised to challenge the top of the channel.
For years, we have been calling this page the "Gold Bottom" study. Since February, when Gold poked its nose above $US 300, we have been calling it the "Gold Bottom or Bull Market study. We'll change it to the Gold BULL MARKET study if and when Gold consolidates above $US 300. Judging by the price action - and by the revival of Gold stocks (more on that in our $A/$US Gold Commentary) - a Gold bull market should not be too far away now.
Gold's poke above $US 300 in early February coincided with the dramatic revival of world stock markets, led by the Dow. The stock market surge served to damp the interest that had been growing in Gold and Gold stalled. But over the past week or so, the stock market surge has stalled, and now, interest in Gold is starting to pick up again in the U.S.. It has not flagged in Japan, where physical Gold demand in February 2002 was 600% higher than in February 2001.
For anyone who wants to, and many seem to want to, Gold is very easy to short these days. Take a look at the LBMA's Gold lease rates. At 0.300%, one month lease rates are the lowest they have been on our data - which goes back to the beginning of 1998. Borrowing Gold is VERY cheap, and still the Gold price is hanging in there.
To sum up, technically, Gold has established a $US 10 trading range between $US 290 and $US 300. The range has held for nearly two months now, and Gold is building momentum for another try at the $US 300 level. Gold (and Silver) are lagging a long way behind most other commodities, especially Oil. But all other commodities, including oil, are NOT alternative forms of MONEY.
This page will be updated on any spot future Gold close ABOVE $US 300 - whenever it occurs. We think that there is a very good chance that such a close could occur in the coming week. Stay tuned