Gold News

Poor Monsoon and "Summer Doldrums" Hit Demand to Buy Gold, But "Bearish Trend Only Weak"

U.S. DOLLAR prices to Buy Gold rose 1.3% from yesterday's 1-week low Thursday morning in London, recovering $1590 per ounce as world stock markets also rallied.

Silver Prices outpaced gold, adding 2.2% to $27.55 per ounce, but the Euro failed to rise above $1.23 for the fourth time in a week.

Spain had to pay 5.2% per year to raise new loans due to mature in 2014 – up from 4.3% at June's auction of 2-year bonds.

German Bunds meantime continued to offer investors less-than-zero as prices rose further, squashing the yield on Berlin's 2-year debt to minus 0.05%.

German inflation was last seen at 1.7% per year. Brent crude oil today rose to a 7-week high above $107 per barrel – the highest level since May when priced in the Euro.

Lawmakers in Berlin were due Thursday to vote on the Eurozone's €100 billion
credit line to Madrid, with German tax payers set to underwrite 30% of the package.

"The range in [Dollar prices to Buy Gold ] is converging," says Russell Browne in his technical analysis for bullion bank Scotia Mocatta, "and is currently defined by $1554 support and $1613 resistance.

"While a bearish trend has been in force since late February, trend momentum is weak."

"Gold on the weekly chart is heading back down towards the 2008-12 uptrend line at 1559," reckons Axel Rudolph, technical analyst at Commerzbank, drawing his 4-year uptrend from the base of Oct. 2008 straight to May 2012, rather than joining the nine rising lows in between.

Over in Asia today, "People are buying and selling when prices move ten or twenty dollars," Reuters quotes a Singapore dealer.

Such tight trading means "We remain range-bound," he says, forecasting that "People are not going to be very hungry for physical materials" until the return of festive demand from India later in the year.

Although the India Meteorological Department says that the current monsoon should improve as August begins – boosting potential incomes for rural consumers to Buy Gold – "Looking at the current scenario of monsoon, I don't expect much pick-up from here," one Kolkata gold wholesale, Harshad Ajmera of JJ Gold House, is quoted today by the Business Standard.

Overtaking India in early 2012 as world #1 for demand to Buy Gold, China is looking to develop its domestic gold market, a report claimed in the Wall Street Journal on Wednesday, by encouraging bank-to-bank wholesale trading.

Aiming to launch on 31 August, the move is "a bid help Beijing gain better pricing power amid growing appetite for commodities such as gold," says the WSJ.

China is already the world's #1 Gold Mining producer nation. Its banks will deal directly with each other, rather than over a formal exchange, says the WSJ's source, thus mimicking the London bullion market, current center of wholesale dealing worldwide.

"Trading has been quite quiet and dull," says one London market-maker in a note this morning.

"Gold is caught into the summer doldrums, and I think the Olympic Games will take their toll on the trading flows."

London commuters are being repeatedly warned to expect long delays when the Games – held near the Canary Wharf financial district – begin a week tomorrow.

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