Is $1,000 the new floor for the price of gold or the same old ceiling?

By P. Radomski, GoldSeek

This week gold finally touched $1,000 so without further ado, we will get right to the charts. Let’s begin with the chart (courtesy of http://stockcharts.com) that features gold in other currencies than the U.S. Dollar.

Here’s a quick reminder of the ratio featured in this chart (price of gold divided by the value of the UDN ETF.)

UDN is the symbol for PowerShares DB US Dollar Index Bearish Fund, which moves in the exact opposite direction to the USD Index. Since the USD Index is a weighted average of dollar’s currency exchange rates with world’s most important currencies, we may use the gold: UDN ratio to estimate the value of gold priced in “other currencies”.

Looking at the price of gold from the non-US perspective, you realize that there is no need to worry about the health of the gold bull market. The price of the yellow metal in the other currencies is not near its previous highs. But those folks who are concerned that there is no bull market in gold because it does not rise equally in all currencies should relax. For now, the fundamental situation of the precious metals market is stable, which means that the bull market is charging ahead. Besides, bull markets usually end when everyone and their brother and the shoeshine boys too, jump in causing a parabolic spike in the price. We are still far from seeing anything like that.

The gold / UDN ratio is quite bullish. It seems to have finally managed to move (and verify) above the support level at the 34-35 area.

Additionally, the three declining trend lines have been broken, a bullish signal indicating higher values of the ratio in the future.

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