Gold Rises 5.6% in August to Record Monthly High and Near Record Nominal High

Gold

After yesterday’s 1% rise, gold traded sideways in Asia but has  risen again in early European trading as the dollar has fallen and oil risen after yesterday’s sharp falls. Gold has risen in dollars, pounds , yen and Swiss francs which are all weaker today but is slightly weaker against the euro and commodity currencies. Gold was up 5.6% in August thereby regaining the 5% losses seen in July.

Importantly, from a technical perspective, gold recorded a record (nominal) monthly high close (see chart below) which should see momentum traders continue "to make the trend their friend". This could result in June’s record high being breached again, possibly as soon as this month. Especially as safe haven demand remains robust and Indian festival seasonal demand looks set to be healthy.

Gold is currently trading at $1,252.10/oz, €977.90/oz, £813.57/oz.

Gold in USD – 5 Year (Monthly). Click on image to view full size

Gold is only a few dollars below the record daily high close ($1,258/oz) and record inter day high now ($1,265/oz) but it is important to remember that these record highs are nominal highs and gold remains  nearly half the more important record inflation adjusted high of $2,400/oz.  Gold is now up 14% so far in 2010 and looks set to have the 10th year of gradual appreciation (some 16% per annum in dollar terms).

This morning risk appetite has returned somewhat after yesterday’s slightly more positive economic news led to flat US equity markets. Equity markets in Asia rose (on positive Chinese and Australian data) and European markets are tentatively higher.

Cross Currency Rates at 1015 GMT. Click on image to view full size

Some analysts have said that the news that Glencore may spin off their gold mining operations in Kazakhstan is bearish for gold as it shows that Glencore wants out of gold. What it more likely shows is that Glencore may want out of the gold mining business in a volatile and geopolitically unstable part of the world with no history of respecting property rights. It is unlikely to have any effect on the gold bullion market whatsoever. It is important to remember that mining gold in Kazakhstan is very different to investing in gold bullion.

Silver

Silver rose 8% in August and is looking very well technically. There is now strong support around the $17.50/oz level. Should resistance at $19.53/oz be breached than silver could make the sharp moves upwards, long anticipated by many analysts, and challenge the high seen in March 2008 near $21/oz.

Silver is currently trading at $19.42/oz, €15.17/oz and £12.62/oz.

Silver in USD – 1 Year (Daily). Click on image to view full size

Platinum Group Metals

Platinum is trading at $1,529.25/oz, palladium is at $514/oz and rhodium is at $2,050/oz.

Mark OByrne

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