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North American gold miners are still prospecting for partners

Section: Daily Dispatches

Bullish XAU Could Indicate
Break Higher In Gold Prices

By Gavin Maguire and Jim Wyckoff
Dow Jones Newswires
Friday, February 18, 2005

http://www.futuresource.com/news/story.jsp?i=i4537233541121114176

NEW YORK -- If history is anything to go by, any break higher in the
Philadelphia Gold & Silver Index of gold and silver mining companies
(XAU) should precede a similar move in the price of gold.

So far in February, movements in XAU values have often preceded
those of the spot gold price by one day.

For instance, on February 7 the XAU fell around 3 percent from a
high of 91.27 to a low of 88.41 and then bottomed out at 87.60
February 8 before staging a recovery on February 9.

Spot gold prices fell from $416.40 to $412.55 per ounce February 7,
and then slipped to $410.65 February 8 and continued to slide
February 9 to $410.25 before following the XAU's the lead by one day
to close higher on February 10.

The XAU then rallied from a low of 90.16 to a close above the
psychologically significant 93.00 level February 10.

This move higher coincided with spot gold's rise from a low of
$411.85 to a high of $418.95 but also preceded gold's February 11
rise to a high of $422.15 and close above the key $420 level.

Since February 11 the XAU has adopted a holding pattern in a 93.52-
95.88 range that preceded spot gold's sideways run in a $421.40-
$427.45 channel since February 12.

Technical analysts agree that the XAU's pattern in recent days could
be deemed a "bullish pennant formation" that suggests another step
higher could be in the offing.

Indeed, XAU prices have sternly probed the resistance in place at
the top of its recent range Thursday to suggest further progress
could be on the cards Friday should a bullish close be achieved.

Using the extent of the February 7-9 decline as a gauge for the
potential upside room available to the XAU on any further rebound,
the 100 and 103 areas are viewed as potential goals.

For spot gold, those figures translate into the $435-437 region,
analysts say. Spot gold around 1200 ET Thursday was quoted around
$427.85 an ounce.

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