Gold futures broke above the psychologically key level of $1,000 an ounce Thursday, propelled by ongoing dollar weakness and bleak news from the financial sector.
Early Thursday, gold for April delivery soared to a record high of $1,001.50 an ounce on the New York Mercantile Exchange. This was the first time that gold surpassed $1,000 an ounce. Graphic: Timeline of gold's march to $1000.
Later in the session, the gold contract gave up some of its gains and ended up $13.30 at $993.80 an ounce.
"Today's spike will likely become known as the Carlyle/Drake rally," said Jon Nadler, senior analyst at Kitco Bullion Dealers, in a research note.
This is the clearest sign that investor's inflation expectations are very high right now -- and getting higher.
Let's take a look at the charts.
This is a very bullish chart. Notice there aren't any severe price spikes. Instead we have two areas of rising prices -- roughly mid-2005 to mid-2006 and mid-2007 onward -- with a period of price consolidation between them. Also note that prices are consolidated several times. This is a very orderly rise.
On the daily chart notice again the very disciplined price rise occurring. Prices move, consolidate for at least a month, and then continue to move higher. It's going to take a lot to break this cycle.
On the daily SMA chart, notice the following
-- Prices have been using the SMAs as support for the last few months
-- The shorter SMAs are above the longer SMAs
-- Prices right now are above the SMAs
-- All the SMAs are moving higher.
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