Monday, January 25, 2010

Morning Gold Pouncers Largely Absent Today

Gold was carried down about $10 earlier this morning, but more than half of that movement took place before the usual pummel time of 8 AM ET. After 8, the price moved down only another $5/oz.

After moving in a somewhat downish range for an hour, gold turned up at 10 AM ET as the U.S. Dollar Index turned down. The greenback then established a trading range, and gold almost got back up to $1,100, but that resistance level wasn't breached. As of the time of this post, the range is still holding as the U.S. dollar is climbing back up. The Kitco Gold Index has gold up $3.20 as of 11:17 AM once the influence of the greenback is factored out.

For the first time in some time, it's been a quiet market price-wise. Gold hasn't really been going upward, but the widespread fears of a solid move downward have not been realized. I'd be surprised if gold gets below $1,090 today.

Update: As it turns out, gold didn't do much of anything in the afternoon. The same trading range, an tightening one, held since it was established at around 8 AM ET today. The $1,090 support level held, and so did the $1,100 resistance.

The U.S. Dollar Index remained in a range too today, bordered by 78.18 and 78.23, except for a brief dip that carried it down to 78.144 at about 3:30 PM. The same range was re-established after 4 PM and held until 5:30.

All in all, an unexciting day. Regular trading ended with nary a blip in the last hour: as of the close, spot gold was at $1,097.10 for a gain of $5.60. The Kitco Gold Index attributed $0.95 of this gain to a slight fall in the greenback and $4.65 to "predominant buying."


For many, these following data will make for a "where was I?" moment. Nine years ago today, on January 25th, 2001, gold was at $264.90 for its London PM fix. Today's PM fix was $1,095.25. In the last nine years, gold was up by 313.5%.

If that wasn't enough to trip on the Regret-O-meter, this stat might: On January 25th, 2001, the Amex Gold Bugs Index (HUI) closed at 47.59. Today, it closed at 398.04. Nine-year gain: 736.4%.

Note that the Gold Bugs Index is not a stock, it's a basket of fifteen stocks whose members change over time. In order to capture close to that gain, the component stocks would have had to have been held in a tax-sheltered account with minimal transaction costs.

What I found interesting is the fact that the HUI does show leverage over the last nine years, even though said leverage has been notoriously absent more recently.

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