Gold Shoots Up To Top $1,350

Thanks to gold's jump above $1,350 today, and its more than twenty dollar gain, the line it was tracing ended up being part of a U-shaped bottom. It rocketed up right around noon ET, which some pegged as anticipation of Ben Bernanke's 1 PM speech and others ascribed to short-covering. The continued turmoil in Egypt had its influence, now that American journalists are being attacked. Most likely, the short-covering was the spark and the other factors provided some of the fuel. Chairman Bernanke didn't disappoint the gold market when he downplayed the risks of inflation and said QE2 was working.

Before that rocket-up, gold once again touched $1,325 after climbing up to the high 1330s around 9:00. Its low of $1,324.00 failing to induce another plummet like last week's, the metal rebounded to the low 1330s. That enduring support also added some fuel to the rocket-up, particularly in convincing shorts that it was time to give up on some of the ghost. Just before noon, gold had climbed back into the high 1330s.

Then, within the space of five or so minutes, it rocketed up to well above $1,350 and stayed there. Bernanke's remarks to the National Press Club, to the extent that the noontime jump anticipated them, fulfilled those expectations. At the start of his speech, gold was at $1,355 and held above $1,350 as his speech and the Q&A came to an end. At the end of the pit session, or 1:30 PM, the spot price was $1,352.40 for a gain of $17.40 on the day. The Kitco Gold Index attributed +$28.50 to predominant buying and -$11.10 to strengthening of the greenback.

Bottoming a half an hour later at $1,350, the metal drifted back up as the electronic-trading hitch proceeded to the end of regular trading. A final drift-down in later afternoon didn't go below $1,352; at the end, the metal jumped up a bit to surmount $1,355. At the end of regular trading, the spot price was $1,355.60 for a rise of $20.60 on the day. The Kitco Gold Index assigned +$32.20's worth of change to predominant buying and -$11.60's worth to greenback strengthening.

Its six-month chart, from Stockcharts.com, shows its jump coming at the end of this week's marking time:



Observe the Moving Average Convergence-Divergence lines at the bottom of the chart. The red line and the black line are now touching each other, signalling a turn to a bullish configuration. If the MACD lines are any guide, today's rallying will not be the end. It's too soon for a rip-roaring bull market to come back - the last one was too recent - but the dog days may be over. Last week's plummet may have been the seasonal low.

As for the U.S. Dollar Index, its own rally took place far earlier than gold's. The Index, more influenced by a strong U.S. productivity report and a lowered initial jobless claims number for last week, started its run-up at 8:30. By the time it was finished, an hour and a half later, it had gone well above 77.5 to reach 77.85. Like gold, it stayed near the height of its run-up: the rest of the session saw it fluctuate between that level and 77.65. By 5:30, it was in the uper middle of its range at 77.795.

Its own six-month chart, also from Stockcharts.com, shows it more than erasing last Tuesday's drop-down:



The two safe havens aren't the same, but there is a temptation to draw a parallel between the greenback now and gold at the beginning of this week. If the Index gets back up to 78 and stays between it and 77.5, we may see another punctuated U-shaped bottom. The greenback's been going down for a long time, and it may be overdue for a pull-up. As noted above, Egypt is attracting attention again.

Given recent price points, it's likely that Asian physical demand will slow tonight unless upwards price acclimatization sets in. It may be too soon for that shift. So, there's a good chance that gold will mark time or even sink in the overnight session. Even if it does, an important prcedent was set today. The dog days may indeed be over, and replaced by a range.