The Gold Economy

Gold: Gold traded sideways in Asian trade, hovering near last week’s close at $1,228/oz. There was a brief spike to $1,231.35/oz in early European trade prior to sharp and determined selling. Gold remained marginally higher until the London AM fix whereupon there was a further wave of selling which took prices down to $1,225.30/oz. Gold is lower in most currencies except the euro and the Swiss franc which are slightly weaker this morning (see Cross Currency Rates).

Gold is currently trading at $1,225.72/oz, €964.91/oz, £788.30/oz.

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Cross Currency Rates at 1200

Asian equity markets were mixed overnight while European markets have eked out meager gains possibly due to merger and acquisition activity. Spreads between Bunds and European peripheral debt were tighter, indicating some return of risk tolerance in government debt markets. With prices at all time historical record highs and yields at record lows, concerns about bubbles in many government debt markets are growing.

Gold in GBP – 1 Year (Daily)

Gold’s higher weekly close last week, while marginal, is important technically and confirms the recent trend change from negative to positive. August looks set to see higher gold prices which will set the market up nicely technically as we enter the stronger autumn months and the Diwali and the Indian buying season. This month’s options expiration could see another round of selling as is common on options expiration and savvy buyers will again use this as a buying opportunity.

Gold in EUR – 1 Year (Daily)

Gold appears to have bottomed out in late July (in all major currencies) and higher prices can be expected in euros and British pounds in the coming months while the eurozone and the UK continue to deal with their significant fiscal challenges.

Silver: Silver is currently trading at $17.92/oz, €14.10/oz and £11.52/oz.

Platinum Group Metals: Platinum is trading at $1,504.00/oz, palladium is at $475/oz and rhodium is at $2,050/oz.

News

• (PTI) — Bullion: Gold continued to glitter at the bullion market and regained its 1-1/2 month high during the week under review on sustained buying by stockists and jewellers as well as good local demand amid firming trend in global markets. “The uptrend in yellow metal was also aided by increased demand from retailers and jewellers ahead of the ensuing festival season,” traders said.
• (Bloomberg) — Hedge-fund managers and other large speculators increased their net-long position in New York gold futures in the week ended Aug. 17, according to U.S. Commodity Futures Trading Commission data. Speculative long positions, or bets prices will rise, outnumbered short positions by 204,228 contracts on the Comex division of the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions rose by 13,541 contracts, or 7 percent, from a week earlier.

Disclosure: No positions