Gold – what's the smart money up to?

Gold has recovered little of Friday's $10 loss in Asia today, slipping in Tokyo before bouncing in Singapore from the six-week low it hit in New York late Friday.

Traders talking to Hindu Business Line in New Delhi blamed the end of the Indian wedding season for the weakening gold price. Jewellery accounts for more than two-thirds of global demand each year.

"Private investors have [also] lost the intention to buy more gold," said a precious metals analyst in Tokyo earlier. He put key support at $610 an ounce, telling Reuters that gold's "lacklustre performance" is worrying Japanese gold investors.

Bearish news also came from the options & futures market late Friday, when the CFTC report for Tues 12 Dec. showed speculative traders are still heavily long of gold. Despite reducing their bullish positions by 1.7%, hedge funds and other big gamblers now have 3 times as many long as short bets on gold. But the "smart money"– otherwise known as the commercial traders – remain short. More than 71% of their futures & options bets are bearish on the metal.

Keep an eye on the currency markets, too. Today's major data release will be US current account data for the third quarter, due at 1330 GMT. Dealers expect it to rise 3% to hit $225bn after last week's tame US inflation data saw the Dollar hold firm, as the Euro slipped against everything. Sterling now represents the "anti-Dollar" for currency investors – including central bankers.

In fact, this year saw the Pound become the world's third reserve currency after Dollars and Euros. Which is just nuts! Click here to read why...