Gold continued to trade above $655 per ounce in Europe today, holding key levels against all major currencies.
Indeed, from the jump seen at Thursday's opening in New York, gold slipped only 0.6% against the Dollar, Sterling and Euro before rebounding.
Japanese gold investors held on to all of Thursday's gains. Gold ended the week in Tokyo earlier today above ¥79,400 – its highest level since May, when gold reached a 26-year high and more against all major currencies.
"I think it's a reasonably bullish break," reckons one Australian gold analyst. "I am not sure if we have established the top side yet...
"Gold's going to [have to] take out $677 and stay above there to convince everybody that it is sort of going to go up again."
But "sort of going up" is what gold has done for the last 4 weeks now. Indeed, this bull market just celebrated its sixth birthday for Dollar investors.
Sterling has now lost 51.6% of its value against gold since July 1999. The Euro's decline against gold started one month later. It's since dropped 52.1% of its value versus the metal.
In the physical sector, premiums for gold bars dropped to 30 U.S. cents an ounce to the spot London price in Singapore from 50 cents two weeks ago.
"There's some selling emerged after gold's recent gains," said Wang Xinyou, senior gold analyst at Agricultural Bank of China in Beijing, to Reuters earlier today.
"[But] if you juxtapose the recent strength in precious metals with the sluggish performance in some of the base metals such as copper, it shows that people are still focused on US currency weakness in the medium-to-long-term...
"Gold will also retain its appeal as a safe heaven," he added, citing the Middle East's ongoing conflicts and the threat of trouble caused by North Korea's regime.
Short-term, gold may be poised for a pullback, says Bloomberg. The 14-day relative strength index for gold futures yesterday rose above 68. Most analysts would be looking for 80+ before worrying the metal was "overbought" however.
Ketso Oura, a gold trader with Sojitz Corp. in Tokyo, reckons the metal will test $670 per ounce before this current run-up in prices is finished. Singapore dealers interviewed overnight cite $660 per ounce.
"We receive a lot of scrap [gold] from Indonesia and Thailand," said one. "We had expected the price to fall below $640 this week, but it didn't happen...Higher prices encourage sales from jewellers...
"We do see some demand but I can't say it's huge. It may be related to Lunar New Year. Gold may try to test $660 again because of a weaker dollar, and also because oil is trying to move back to $60 a barrel."
China's gold demand may also get a boost from changes in the country's tax rules. The World Gold Council today asked the Beijing government to review China's 17% value-added tax charged on gold bullion bars.
"We see a huge demand potential given the Chinese people's large bank deposits," says Albert Cheng, the WGC's managing director for the Far East.
China's private bank deposits are now valued around $2 trillion. If gold trading became easier for private individuals – as it did in Europe when VAT was removed from gold bullion bars – the effect could be dramatic.
To learn more about China's growing demand for investment gold – plus in-depth analysis of the cost problems facing the world's gold mining companies – click here and read on...