Two weeks ago, on Friday, July 19, the Comex spot future Gold contract hit an intraday high of $US 326 on its way to a six-week high close of $US 323.90. On Thursday, August 1, the Comex spot future Gold contract hit an intraday low of $US 298 before rebounding above $US 300 to close at $US 304. From intraday high to intraday low, Gold fell $US 28.00. At its spot future close of $US 307 on August 2, Gold has got $US 9.00 or 32.1% of that back. Not bad for a day and a half.
Here are the relative performances of $US Gold, the $US Index, and the Dow since Gold broke above $US 300 on March 27:
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If Gold's gain had exactly mirrored the loss on the $US index since March 27, Gold would have closed on August 2 at $US 332.57.
Gold has staged its rebound as the U.S. stock markets start to retreat from their HUGE bounce between July 24 and July 31. While Gold has been rising $US 9.00 (or 3.02%) from its intraday low on August 1, the Dow has been shedding nearly half its late July rise. On August 1-2, the Dow lost 423 points or 4.84%
Here's another perspective - a comparison between Gold's 2002 low and its present price and the $US index 2002 high and its present "price". All data is on CLOSING levels:
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The most interesting of the charts on the left are the weekly bar chart and the point and figure chart. On the weekly bar chart, Gold rebounded when it hit its longer-term (40 week) moving average at the $US 298 intraday low of August 1. It is now $US 9.00 higher than that low. On this chart, resistance is at the shorter-term (20 week) moving average (and the June lows) around the $US 310-312 level. On the point and figure chart - on CLOSING prices - you can see that Gold dipped just below the top of its post April 2001 upchannel and turned right there. On this chart too, resistance is about $US 310-312.
And finally, here's one final perspective, comparing Gold's 2002 high set on June 4 with its level today.
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So far this year, Gold is still further above its 2002 low than the $US index is below its 2002 high. But as you can see from the table above, the story since Gold hit its 2002 high on June 4 is QUITE different. In the two months since June 4, $US Gold has fallen quite a bit further in percentage terms than has the $US index. Of course, almost all of Gold's fall came during the week of July 22-26. If the action on spot future $US Gold had "mirrored" the action on the $US index since June 4, then Gold would be 3.78% ABOVE its June 4 level of $US 327.80. That would put Gold at $US 340.19.
Now, the first evidence of the "cost" (to the financial powers that be) of Gold's $US 20.60 swan dive of July 22-26 are coming to light. According to the Commitment of Traders (COT) report for the week ending on July 30, Commercials reduced their short contracts by a whopping 22,649 or 19.1% while Speculators reduced their long contracts by 20,736 or 43%. Seems we have a fundamental difference of opinion here.
Even more interesting, Commercials increased their longs by 12071 contracts or 23.3%. That's a HUGE turnaround in "sentiment" by the Commercials
Gold has weathered the first push below $US 300 very well indeed. It is now in the process of trying to firm up a $US 30 "trading range" between $US 300 and $US 330. Since Gold confirmed its bottom by rising from the $US 255 low it set in April 2001, we have seen steadily rising trading ranges. This may be another one, or it may be a final correction induced by a desperate financial establishment. Time (and possibly not very much time) will tell. Stay tuned.