Gold Rises for 7th Straight Day

2010-AUG-06

From the GoldMoney News Desk --

Gold made its 7th straight daily gain on Thursday, rising to close at $1,197.20/oz in New York as a jumble of factors combined to support the metal. Helping gold along this week was demand from Asia, a fall in the US dollar, and a broad based rise in commodities.

On Tuesday this week The People's Bank of China released a statement revealing that it was going to increase the flexibility of bullion trading. It plans to do this by allowing a wider range of banks to trade overseas. This boosted gold, as analysts expect an increase in trading volumes in the coming months.

Buying of physical gold has been relatively strong, with demand mainly originating from India and China. The Indian festive season, which starts on August 24th, is traditionally the strongest time for consumers buying gold bars and coins. India is the world's largest consumer of gold, with China coming in a close second.

Gold's inverse relationship with the dollar was reinstated this week, with the dollar falling to month-on-month lows against a basket of currencies. Towards the latter part of the week the dollar started to recover, but it did little to dent gold's bull run up to $1,200/oz.

Even for all its recent gains, the yellow metal was still capped at $1,200 and after hitting a 1-week high at $1,202.80/oz, it soon fell back to around $1,195. Mark Pervan, Senior Commodities Analyst at ANZ Melbourne commented to Reuters: "Its still a very tricky market to call on the near term. I suppose the positive sign for gold now is that it has held up some pretty heavy selling pressure towards $1,150."

Silver has been outperforming gold recently. On Monday the gold/silver ratio (how many ounces of silver it takes to buy one ounce of gold) was below 65, it's lowest since May. Silver followed gold up this week reaching $18.66/oz on Wednesday before falling back to $18.30.

Platinum briefly touched $1,600/oz in early trading on Tuesday this week before falling back to around $1,570 into Friday.

Palladium continued on from last week's recovery to top-out on Monday this week at $514/oz, it's highest in almost 3 months. By Friday palladium was back down to around $490 as demand weakened.

All data and quotes sourced from Reuters.