Last week, Gold was up $US 2.40. This week, it is down $US 5.80 ($US 322.10 to $US 316.30). That spot future close of $US 316.30 on October 11 was Gold's lowest close since September 4. Not too coincidentally, U.S. stock markets, and the Dow in particular, have just completed their first "up" week since August. When the Dow surged 347 points on Oct. 1, Gold fell $US 3.00. When the Dow surged 248 points on Oct. 10, Gold fell $US 3.10.
This time, the stock market rally has lasted more than one day - the Dow was up 564 points on Oct. 10-11. But on Friday, Oct. 11, Gold hardly moved (down $US 0.20) and the $US index didn't move at all.
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 October 11 at $US 331.00.
As it has been doing for most of the last two months, the figure above hovers at or about the $US 330 level. As you know, $US 330 is the VITAL level for Gold to reach, and preferably surpass, if it is going to embark on a new leg of its bull market.
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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On the daily bar chart, Gold has dipped below both 10 and 20 day moving averages for the first time since late August. On top of that, the shorter-term average has dipped just below the longer-term one. On the weekly bar chart, Gold has dipped back to be resting right at its shorter-term (20 week) moving average. And on the point and figure chart, we now have two peaks, the $US 327.80 2002 high on June 4 and the $US 326 close on Sept. 24. As you can see, first support on this chart is right around the $US 315 level.
And finally, here's one final perspective, comparing Gold's 2002 high closing level set on June 4 with its level today.
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Both Gold and the $US index have lost ground over the past week, but Gold's loss since its June 4 2002 high is now bigger in percentage terms than the loss on the $US index over the same period. If the action on spot future $US Gold had "mirrored" the action on the $US index since June 4, then Gold would be 3.20% ABOVE its June 4 level of $US 327.80. That would put Gold at $US 338.30.
Every time there is a rally on US stock markets, Gold slips back. Hope does indeed spring eternal on Wall Street. But while Gold has slipped back this week, there has been a BIG change on a key Gold "indicator" - lease rates. We comment on this in some detail in our main Gold commentary this week.