Spot gold prices held steady as Wall Street opened on Monday, continuing to trade near Friday's two-week highs above $672 per ounce.
Gold priced in Pounds Sterling had earlier begun London at a three-week opening high.
Trading above £337 per ounce, physical bullion for British investors wanting to buy gold now has risen 3.9% from the start of January.
French, German and Italian investors saw the price of gold in Euros begin this week at €499 per ounce – up 3.7% from the start of the year.
"Gold has now recovered strongly above the 100-day moving average," says today's technical analysis from Standard Bank, "and conquered the $665 congestion area.
"This area of previous resistance should now prove to be the immediate key support area.
Citing Friday's news that the European Central Bank (ECB) has now closed its gold sales program until at least Sept. – ending a major source of supply in the physical bullion market – Standard Bank says that "gold could receive a renewed boost and likely test higher, with initial target of $680, followed by $692 and $700."
But while last week's sharp rally in the spot gold market is good news for investors already holding gold outright, the 2.1% rise in physical gold prices risks denting gold jewelry demand, reports the Bridge newswire.
It quotes a jewelry shop owner in Bangkok as saying that Thai consumers now only buy gold when the price falls. She did not do any trade in gold bars during Thursday or Friday.
The week before, however, when the local Thai gold price stood just 0.8% lower, the volume of bar gold sales was reported to be between one-fifth and one-third greater.
"The trading volume dropped later as soon as the price increased," says VietNamNet.
Meantime in the gold mining sector, gold's ongoing bull market continues to attract fresh investment and development dollars.
Mining Weekly magazine reports that Gold Fields, the world's fourth largest gold mining company, is about to start work on the world's deepest-ever mine projects – more than 4 kilometers below ground.
Gold Fields is spending ZAR 4.7 billion ($0.66 billion) to deepen both its Kloof and Driefontein mines, near Carletonville, South Africa, giving it access to 10.8 million ounces of gold from 2011.
AngloGold Ashanti, the world's third largest gold miner, is meantime spending $160 million on deepening its TauTona mine, also in Carletonville, to just more than 3,900 meters below ground.
TauTona is expected to yield 2.6 million ounces of gold between 2008 and 2017. The world's deepest mine is currently AngloGold Ashanti’s operation at Savuka in South Africa's North West province, running to a depth of 3,777.
"Mining deeper and deeper does not come cheaply, though," says Mining Weekly.
"At Driefontein, apart from the capital costs to get there, mining at depth will cost ZAR66,000 per kilo [$296 per ounce] over the life of the mine."
South Africa already has higher gold-mining costs per ounce than even the United States.
Now AngloGold Ashanti, Harmony Gold and Gold Fields also face a 15% wage demand from South Africa's National Union of Mineworkers said an NUM spokesperson over the weekend.
Inflation in the cost of living in South Africa hit 6.3% in April. "I'm sure this is going to be a tough round of negotiations," responded Elize Strydom, chief negotiator for South Africa's Chamber of Mines, to Bloomberg News
Formerly the world's largest source of new gold mining supply each year, South Africa has seen production fall by more than one-half over the last decade.
Real fixed investment in its mining industry grew by 7.1% last year, but that only came after 13.1% drop in 2005 and a cut of one-fifth in 2004. (Read about the impact on output of mining mergers & acquisitions in the gold sector here...)
Now "there is a shortage of contracting capacity with shaft-sinking companies in South Africa," says Michael Solomon, CEO of junior platinum miner Wesizwe.
Gold mining output in China, by contrast, is growing fast.
The China Gold Association said today that gold mining production hit more than 77 tonnes between Jan. and May – an increase of nearly 14% from the first four months of 2006.
While South African output falls, will China's gold mining production make it to market? Get expert analysis of China's gold output here...