Interesting Phase as Gold Price Pushes Ahead Despite Growing Private and Scrap Sales

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...This does suggest that gold's upward path will continue in the near term a least, although there could be occasional setbacks in the upward path as some factor or other impacts an easily spooked market. And the higher gold rises, the easier it will be for an occasional sharp setback to occur.

By all accounts sales of gold scrap, and even of gold jewellery, are now hitting the market, while sales into the jewellery sector are weak, but even so the gold price has been moving ahead steadily over the past week or so. To an extent the additional supply coupled with lack of jewellery demand is currently being counterbalanced by anticipated production shortfalls from the South African mines as a result of the recent power problems in southern Africa.

What is particularly interesting in terms of the gold market is that when it reached its old $850 peak back in 1980, it was this phenomenon of offloading old gold in line with the higher price, coupled with falling demand as the jewellery sector held off buying through nervousness, which caused an almost immediate gold price slump bringing the yellow metal's price down almost as sharply as it had then risen. This just hasn't happened this time around - or at least not yet, although the price has come back fairly sharply in afternoon trading in London today.

...This means the principal driver is still dollar weakness and with aggressive Fed interest rate cuts in an attempt to stimulate the US economy, coupled with the latest unexpectedly poor jobs data, greenback weakness, or at least the perception thereof, has to be continuing and given that the economy cannot turn round overnight there are likely to be at least bouts of dollar weakness over the next several months - and maybe for longer. This does suggest that gold's upward path will continue in the near term a least, although there could be occasional setbacks in the upward path as some factor or other impacts an easily spooked market. And the higher gold rises, the easier it will be for an occasional sharp setback to occur.

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