This time, silver joined gold in rallying even though the greenback was largely stable during the day. The gray metal put on more than $1.50 in a strong rally, while gold's rally was more modest: both benefitted from a Goldman, Sachs upgrading of the commodity sector. WTI crude oil also gained, closing just below $100. Gold, despite its relatively lackluster gain, held its ground above the $1,520 resistance level and closed above $1,525.
The metal was sluggish at the start of regular trading, hovering just above $1,520 and testing it on the downside. Earlier, it forged above $1,520 on some weakness in the greenback; the currency fell below 76.0, and stayed slighly below that level today. Shortly before 9 AM ET, the metal shook off its doldrums and climbed up to $1,529.40 before falling back to $1,527-8. It slipped at 10:30, to below $1,523, and its recovery took it to a lower peak. The stage was thus set for a decline to $1,521, reached just before 1 PM.
Then, the metal trundled back up to the high 1520s after being blocked at $1,525. Slipping back to $1,524 in later afternoon, it managed a last-hour hoof-up that peaked at $1,527. Had it not been for a last-minute slip, gold would have been on the verge of a double-digit gain. Instead, the spot price closed at $1,526.10 for a gain of $8.90 on the day. The Kitco Gold Index split the gain into +$4.50 for predominant buying and +$4.40 for a weakening greenback.
Gold's six-month chart, from Stockcharts.com, shows it gaining for a third day in a row:
In so doing, it managed to poke up above the resistance level that stymied it yesterday. It's managing to shake off the near-correction that visited it at the beginning of this month, aided by new flare-ups of the Eurocrisis. Gold's Moving Average Convergence-Divergence lines, found at the bottom of its chart, are getting close to a bullish cross and look like they'll do so tomorrow. Gold's still too top-heavy to shake off those plummets of three weeks ago, but it's established a weak short-term uptrend with a slightly higher high and higher low. It's not exciting, but it is encouraging.
The U.S. Dollar Index did little in today's regular session. A slight downward drift from the start of the session to late morning, which bottomed well above 75.8, gave way to a climb that peaked at just above 76.0. Failing to sustainably climb above 76, it descended to 85.81 but climbed most of the way back in later afternoon. As of 5:15, it had slumped to reach 75.91.
Its own six-month chart, also from Stockcharts.com, shows today's decline erasing most of yesterday's advance:
Most, but not all. Although the Index was flummoxed today, its intermediate-term uptrend is still intact. Lately, it's been the beneficiary of Eurocrisis-related safe-haven buying to a greater extent than gold. Although not being able to reach 76.5, it may make another try for that level by the end of this week.
Gold breaking above $1,520 is a good sign, as it established a weak uptrend. Given its run in from late January to the end of April, and the excitement that accompanied its record-setting peak at $1,578.20, a weak uptrend is more than can be reasonably hoped for. Normally, the metal consolidates for as long as several months after such a run. Moreover, gold's summer seasonality isn't that good. Should the metal manage to get above $1,540, its short-term uptrend will be more than a relief rally - but, given its usual habit of resting after an intermediate-term run and its tendency to stumble down in the summer, it current record will likely hold for a fairly long time.