Last week, spot future Gold got within $US 1.80 of its 2007 high on April 13. This week, Gold has closed above the $US 690 level twice, on April 16 and again on April 20. Thus, Gold is now at new 2007 highs, the only remaining resistance point being the bull market high of $US 721.50 set in May last year.
Let's have a look at the Gold charts.
The $US 1 x 3 Gold chart
The first thing to note on this chart is the simple fact that Gold has reached new 2007 highs, surpassing the levels it reached at the end of February. These new highs serve to confirm the uptrend line (the green line) drawn through the bottoms on this chart. Major support is therefore now at or about the $US 660 level.
After that, we can see that the latest distribution zone, caused by Gold's $US 4.80 fall on April 19, has come just where it would have been expected, right around that previous 2007 high.
The $US 7.70 rise on April 20 turned this chart up of course. At its present level, the Gold price is two "Xs" higher than it was on April 16 when Gold closed at $US 690.10. One more "X" - a close of $US 693 or higher, will give us a LARGE breakaway gap on this chart. That would be the signal for a run a at the May 2007 bull market high just above the $US 720 level.
Because this chart is on the smallest scale of the point and figure charts we run, it is the least important of the charts. It is far too easy to be spooked by what look like big dives in the price - three of them on this chart which goes back only about nine months.
But even on this small scale chart, as long as the uptrend line is intact, and it has just been confirmed, Gold CANNOT break down from its bull market. That is the usefulness of trendlines.
The $US 2 x 3 Gold chart
This chart is twice the scale of the preceding chart. While the $US 1 x 3 chart only goes back to August 2006, this one goes back to late 2005 when Gold was still (just) below the $US 500 level. It gives a much better view of the big picture.
It also includes the bull market high set almost a year ago in May 2006. As we have pointed out in recent editions of "Gold This Week" (GTW), the period since that bull market high was set on May 11, 2006 is the longest Gold has gone without setting a new high since the bull market began.
On the $US 2 x 3 chart, you can see the same uptrend line as the one on the $US 1 x 3 chart based on the same ascending lows since August last year. The difference, as you can see on this chart, is that Gold is still below its bull market highs.
Take a look at the chart as a whole. Do you see the wide "double bottom" based in the May and August 2006 lows? And please not that after this double bottom was established, Gold has steadily risen to its present level. The only thing we have to wait for now is to see how long it takes Gold to reach new bull market highs. On this chart as on the $US 1 x 3 chart, everything is set up for it - and soon.
The $US 5 x 3 Gold chart
Now, here's the REALLY useful chart - the "strategic" $US 5 x 3 chart going back to the top of the last Gold market more than eleven years ago in February 1996.
The first thing to notice on this chart is how "puny" the 1996 - 2002 bear market looks in comparison to the subsequent 2002 - to date bull market.
The second and most important thing to note is the uptrend line on the chart. This line has NEVER been broken ever since it was established way back at in early 2004 when Gold broke decisively through its previous (1996) bull market high. This simply means that there has NEVER been a technical reason to do anything but accumulate Gold ever since this bull market began.
As you can see, the chart is presently one "X" above its previous high, having exceeded the $US 690 level this week. To reach three "X"s above the previous high will require a Gold spot future close of $US 700 or high. To signal the next LONG wave of the $US Gold bull market would require a close three "X"s above the May 2006 high. That means a spot future Gold close of $US 735 or higher.
Above that, there's nothing but the all time high spot future close for $US Gold - $US 850 set in January 1980. To see what's happened since then, going back to the bear market bottom of June 1982, take a look at this chart
As we stated here last week, these are the numbers to watch out for:
With $US Gold setting a new 2007 high this week, only three numbers remain
Here is Gold in four major currencies in relation to its bull market high. As you can see, the 2006 high in Japanese Yen has been bettered this year.
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