Spreads continue to narrow between near-dated and long- dated futures. This would indicate that the sum total of futures contracts for delivery are in demand. This would also indicate that banks are hedging against any exposure to the rise in gold prices, by buying back futures contracts.

It could also mean that a derivative that juxtaposes bullion prices against rises in the S&P has to be unwound. Certainly there were spread trades that pitted oil against gold that needed to be unwound.

Overall it would indicate that interest rates are again falling below inflation.

http://quotes.ino.com/charting/index.html?s=NYMEX_GC.G15_M20.E&v=dmax&t=l&a=0&w=1

via Advisor Analyst

Interest rates, especially at the short end of the curve, are at a high, not really at a low as people would expect. I expect that rates are meant to remain below infation, meaning that gold has further to rally. When markets come off, rates should plunge into the negative, revealing the true outcome of quantitative easing, which is devaluation by aggressively pricing in negative rates.

http://online.wsj.com/mdc/public/page/2_3020-treasury.html#treasuryB

Therefore price might not be an indicator in bullion markets, but rather that interest rates, being below inflation, and remaining below inflation are a determining factor

What chart would you use?

source: http://www.advisorperspectives.com/dshort/updates/Treasury-Yields-in-Perspective.php

http://www.advisorperspectives.com/dshort/charts/yields/perspective.html?yields/treasuries-FFR-SPX-since-1962-real.gif

The gold chart is missing here, but would make a very interesting overlay. Price aught to be the determining factor, but since interest rates aren’t a price per se, and only to be determined by bond prices, then bullion prices are similarily a reflection of interest rates, and that they reside below inflation.

The hard part is determining exactly how strong inflation is without making subjective determinations, or perhaps that deflation is also a subjective a determination. A good example of how gold prices have bucked the deflationary outcome of a decline in the oil price, or that of the new trend in conventional markets is towards ever larger corrections, is that bullion prices have stabilized in a low interest rate regime, which is bound to decline.

Looking solely at the bullion price is probably erroneous at best, like trying to determine bond prices by looking at the prevailing interest rate.

$Gold:$CDW Monthly

The Canadian dollar gold price has broken out in the monthly log scale chart, giving a measurable technical price level to forecast a peak price. Of course you would have to wait for the monthly close, but the weekly chart is showing s moving average crossover. It also means that gold prices are stable here, but could also mean that s negative interest rate in the U.S. could reverse the U.S. Dollar uptrend.

http://scharts.co/1p2ktTC

-F6