Spot Gold Prices ticked lower during Asian trade on Wednesday, just dipping below $680 per ounce at the opening in London but holding more than 1% above yesterday's start.
"Many things are pointing in a positive direction for gold, the market is in a new upward phase," said one Tokyo analyst to Reuters.
"Gold is drawing a lot of seasonal demand now. Confidence remains in the market after seeing long-term funds stay in gold despite seeing the turmoil in financial markets."
"Funds seem to have renewed interest in gold now," agrees Ellison Chu, head of precious metals for Standard Bank in Hong Kong. "The prospect of a weakened Dollar might be a reason."
Early Tuesday the Dollar held steady, unchanged against the Japanese Yen at ¥115.80. The Price of Gold, meantime, held firm against all major currencies.
But interest rate futures point 100% to a cut in the rewards paid to anyone holding Dollars on deposit when the Fed meets on Sept. 18th. Further pressure on US interest rates came when new data yesterday showed US construction spending falling 0.4% in July from June. Economists had expected no change.
Today at 14:00 GMT brings Pending Home Sales data for July, expected to show a 2% fall from June's 5% increase. Before that, the ADP employment report at 12:15 GMT will foreshadow the official US unemployment data due Friday.
The Fed's monthly Beige Book of key statistics and analysis follows today's London close – and already this morning, German and UK data releases have shown the service sector in both countries growing faster than forecast in Aug.
That news, however, failed to reverse the Dollar's two-day rally against Euros and Sterling, which continued to trade below $1.36 and $2.01 respectively.
"[August delivered gold's] third highest monthly close ever," notes Christopher Langguth in today's TechniChris note for Mitsui. "In 1980 the January close was $681.50, $1 higher than April 2007."
The Gold Market ended last week above $672 versus the Dollar. It's since gained more than 1.5% against both Euros and Sterling.
"The immediate objective [now] is the recent high at $692.50," says Langguth, "followed by last year’s high, $723. The Gold Price would have to fall below $640 to turn the monthly trend down."
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