Gold News

Gold bounces after testing a 7-week low

Gold has bounced in thin trade in Asia after closing New York for a third losing day at a 7-week low on Monday.

"Gold is rising because of the weak [US] Dollar," said a futures trader in Seoul, ignoring December's 5% drop so far. "It seems difficult for the Fed to raise interest rates as most of the economic indexes released in the US have been negative."

But the currency market doesn't care about fundamentals right now, and the Dollar held its ground once again on Monday despite very negative data.

America's trade gap widened to a record $225.6 billion in the third quarter, said Washington, up from $217.1 billion in the spring. The NAHB/Well Fargo sentiment index - a leading real estate indicator - fell to 32 this month from 33 in November. Any reading below 50 means that most US estate agents see conditions as poor.

"It's a given that US will lower interest rates next year and Dollar will trade weak," said a commodities trader in Mumbai earlier. But not even bullish gold news has helped gold prices move sharply higher today.

The World Gold Council's office in Dubai announced that local retail gold sales rose 41% between June and Sept. compared with summer last year. And this month's Dubai Shopping Festival could see sales rise 45% on 2005 levels, according to an industry expert – even though gold prices have risen dramatically year-on-year.

What might 2007 hold for gold prices? Ben Bernanke's trip to Beijing to "talk down" the Dollar last week might give you some clues – click here to find out...

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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