Gold in dollar terms has been and is seriously weak; in terms of the EUR and the Yen it is weak, but is demonstrably less so. We remain long of gold in EUR and Yen denominated terms only and we see no reason to change that thesis at this point, although certainly we are not happy about the weakness suffered last Friday following the release of the Employment Situation Report and the dollar’s flight higher.

Looking at the charts of gold in dollars, EURs and Yen terms going back into mid- December, gold/EUR is up from approximately €975/oz. to €1080, or +10.8%. Gold/Yen over that same period of time has gone from approximately ¥142,500/oz. to ¥141,800, or a loss of 0.5%. But in dollar terms, gold has fallen from approximately US$1210/oz. then to $1172 or a very material loss of 3.1%. We think it is important to note that even in gold/Yen’s case the loss of 0.5% is better than the loss of 3.5%, and certainly in Gold/EUR’s case, the gain of 10.8% is decidedly better than the loss of 3.5%.

The open interest in the futures market in gold Friday rose a stunning 2.5% and the fact that open interest in the gold futures raised that sharply on that same weakness tells us that the gold bears were shockingly active. Adding to the bearish case is the fact that the NYSE ARCA Gold Bug Index fared even more poorly than did gold itself, with HUI falling over 7%.

The fact that gold/US$ has effectively fallen to a new low… or is very, very near to doing so… makes the bullish case difficult, if not wholly impossible to make at this point. There is some modest support to be found on the very long term charts for gold at or near to $1150 but one has to believe that that support shall be put to test sooner rather than later.

Indeed, the only hope for the gold bulls in technical terms is for those lows to be taken out and for a “reversal” to the upside then to develop. Until then, the trend is down for gold in dollar terms.

This article was written by Dennis Gartman. Mr. Gartman is a strategic partner with the AdvisorShares Gartman Currency Hedged Gold ETFs (GEUR & GYEN).

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