Spot gold prices closed the week in London $7 higher from the previous Friday, rising to $654.50 per ounce on a mixed-bag of economic news for the Dollar.
Pierre Lassonde, former head of Newmont Mining and now chairman of the World Gold Council, believes
gold will rise to $700 per ounce by this fall. (Read more below...)
This Friday the Afternoon Fix in London had earlier come in at $653.10 per ounce, the lowest PM Fix on a Friday in 13 weeks.
On the physical spot market for gold, however, prices rose against all major currencies.
Most spectacular was the gain for Japanese investors wanting to buy gold at spot prices.
Physical gold bullion rose 2.4% versus the Yen this week, as the Japanese currency sank to fresh four-and-a-half year lows on the forex markets each and every day.
The gold bullion market rose Friday as Wall Street opened after trading steady above $650 per ounce in both the Asian and early European sessions.
Just before the opening bell, the US Dept. of Labor had reported that consumer price inflation rose 2.7% in the year to May.
The so-called "core" inflation index – closely watched by the Federal Reserve in setting its interest rate – came in at half the rate expected at 0.1% month-on-month.
But analysts had been looking for a slower rate of increase in the headline CPI inflation cost of living.
(Find out why inflation – and the rate of interest – matters to the gold market here...)
Friday also brought news from the London Bullion Market Association (LBMA) that gold-dealing in the world's major bullion market had slipped in May.
The volume of gold dealing fell by 3.5% from April to a daily average of 19.5 million ounces. But the number of deals rose by 1.8% to average 1,538 per day.
Gold market analysts put the true figure for physical gold dealing in London at three times the LBMA data.
Looking ahead, Pierre Lassonde – former president of Newmont Mining, the world's second largest gold-mining company – told Reuters that he expects gold prices to resume their long-term uptrend from here.
One of Canada's leading gold-market analysts and now chairman of the World Gold Council, Lassonde said that "In the fall this year, we would probably see prices somewhere between $700 and $750.
The big news of the week for gold analysts was the announcement that the Swiss central bank is going to sell 250 tonnes of its bullion over the next two years.
Citing gold's spectacular rise since 2005 – when the Swiss National Bank completed the sale of 1,300 tonnes of the metal – the SNB said it wants to rebalance its foreign reserves portfolio.
Matt Turner – an analyst at Virtual Metals, which publishes the highly respected Yellow Book – thinks this significant.
"Greece has 80% of its reserves by value in gold," Turner told Resource Investor, "Portugal 79%, Italy 66%, Germany 63%, Netherlands 56% and France 56%.
"If these banks were to reduce their reserves to 30% – as the Swiss are doing – Germany would have to sell 1,802; Italy 1,341; France 1,273; Switzerland 394; Netherlands 311 and Portugal 235 tonnes."
To learn more about the history of central banks selling gold – and what it might mean for the price of gold – click here and read on...