Gold fell yesterday for the first day in 3 and was down some 0.8%. Gold was flat in Asia but has fallen again in Europe to $915/oz. Support remains at $900/oz.

The short term trend may remain down but the medium to long term trend remains up.

Both technically and fundamentally gold’s outlook remains positive despite having to deal with the recent headwinds of falling demand for gold jewellery in India and internationally and the marked increase in scrap supply.

These notable decreases in demand and increase in supply are being confronted by very robust and very significant investment demand by retail investors, hedge funds, sovereign wealth funds and even central banks.

This is a titanic battle and it has effectively capped the price in recent weeks but the huge investment demand looks set to overcome the fall in jewellery demand and increase in gold scrap supply.

As usual the “man in the street” and most of the public is selling their gold (jewellery scrap supply) while the smart money, many large investors and institutions are buying gold. The man in the street and the retail sector has not caught gold mania yet and is selling gold rather than buying. This in itself is a bullish contrarian indicator.

Demand for physical bullion in the form of digital gold, certificates, coins and bars remains very robust with continuing supply issues, delays and sustained very high premiums. ETF demand remains very strong. Indeed, some have claimed that all the ETF holdings internationally, which the World Gold Council reported climbing 27 percent last year, represent far more gold ownership than actually exists (According to National Geographic, only 161,000 tons of gold have been mined in human history — barely enough to fill two Olympic-sized swimming pools).