Is the gold price going to party like it’s 2007? The striking resemblance between 2007 and today
Whilst we’ve made a comparison to this most recent pull-back in the gold price and the sell-off that happened back at the end of 2008, there is another pull-back during this gold bull run that actually bears a much closer resemblance than the one in 2008.
It is the pull-back that occurred during the first half of 2007 – and as you can see from these charts the side-by-side comparison is quite noticeable.
Spot the difference:
(click for sharper image)
And on closer inspection we can see that the 2007 iteration is a lot closer in kind than the 2008 sell-off vintage:
2007:
(click for sharper image)
Right at the end of 2005 you can see gold makes a new weekly closing high for the move of $453. The gold price then retreats from this high. Then 11 months later the gold price breaks through $453. Then crucially the price pulls-back once again and retests that $453 area and then breaks higher.
The gold price then moves to make a new high at $575. Again the price pulls-back before breaking through $575 in April 2007 where it then goes on to make another record high of $730.
The move from $453 to $730 is around 62%.
After making the record high of $730 there is a sharp correction back down to the old high of $575. The gold price then rallies back around 17% to the $675 level. There is another pull back once again to the old high of $575 where gold once again bounces from.
During this move gold never closed out the week below it’s old record high of $575.
Gold today:
(click for sharper image)
Right at the end of 2010 you can see gold makes a new weekly closing high for the move of $1177. The gold price then retreats from this high. Then 7 months later the gold price breaks through $1177. Then crucially the price pulls-back once again and retests that old high of $1177 and then breaks higher.
The gold price then moves to make a new weekly closing high at $1560. Again the price pulls-back before breaking through $1560 in July 2011 where it then goes on to make another record high of $1920.
The move from $1177 to $1920 is around 63%.
After making the record high of $1920 there is a sharp correction back down to the old high of $1560. The gold price then rallies around 15% to above $1800. There is another pull back once again to the old weekly closing high of $1560 where gold once again bounces from.
Gold rallies nearly 15% again before pulling back again and retesting that old weekly closing high of $1560.
Crucially gold has never closed out the week below it’s old weekly closing high of $1560.
It also worth looking at a longer term chart to see how that pull back in 2007 now looks almost insignificant after the 235% rally in the price from that support line at $575.
(click for sharper image)
Can we expect this more recent pull-back to similarly fall into obscurity as the gold price marches higher in the next 18-24 months?
It’s also important to remember that pull-backs in gold are absolutely nothing new and are all part of very health strong bull market – the fact that it’s back-and-filled all the way throughout it’s 13 year bull run is telling you that.
What holds the key is that $1560 weekly closing level of support – as long as that holds it’s quite possible that this is the bottom in this most recent correction. Currently gold is trading $1563 on this Friday, just above that important level – will… it… hold?
Related posts:
- Gold price softer today after closing at the top of its ‘box’
- Gold Price in Striking Distance of $1,400
- Gold price falls through its 200 daily moving average to $1670, down 2% for the day – watch the $1677 level into the close today
- Gold Joining the Party?
- Gold price rebounds as the 200DMA holds again
Link to this article: : http://www.goldmadesimplenews.com/gold/is-the-gold-price-going-to-party-like-it%e2%80%99s-2007-the-striking-resemblance-between-2007-and-today-6996/
Posted by Thomas Paterson on May 25 2012. Filed under Analysis, Gold News, Markets.
You can follow any responses to this entry through the RSS 2.0.
You can skip to the end and leave a response. Pinging is currently not allowed.
