Gold - Losing its Luster?

Interesting comment on gold, we can follow-up on this one in the next month. Bob

Tuesday, May 25, 2004

By Robert J. O'Brien, Jr.

Less than two months ago, the troubles in Iraq had pushed gold above the $430 mark. Now, even thought the war has seemingly gone worse, gold is trading under $390. True, gold has rallied over $10 from its recent lows, but it may be struggling at these levels. Although futures finished higher yesterday, the market did not make a new high. Have we seen this pattern before?

Q: What has happened in the past when, during May, gold rallies between $10 and $15 from a recent (less than 3 week) low; and when it finishes higher on the day, but the days's high is less than the high of one day prior?

A: Gold prices have declined in all cases by averages ranging from -4.1% to -9.7% over the period from 20 trading days after the event to 42 trading days after the event. See the chart below for a dramatic look at this bearish historical edge.

Source MarketHistory.com