By Jonathan Barratt


Sentiment in the gold market is turning. As we have mentioned a few times, do not lose faith in the trade. It has been hard over the last few weeks to remain long, however those that have stayed with the trade are seeing good returns. As we are oscillating around resistance at US1335-40 again we have to question our bullish resolve. Do we hold onto the metal, sell or add to positions?

All bull markets need to consolidate gains and this is what we have been seeing. It is interesting that we received market "intel" that the BoE was again in the market liquidating long physical positions. In fact the Bank sold 100,000 large bars to help raise USD50 billion. We are not sure why the bank was in the market and this is perhaps one reason why the Gold price retreated however the sale looks to be completed. Together with this, other macro issues look to be at play and as we attempt to break resistance we look towards other market drivers for more support. In the ETF market we have seen a turnaround in liquidations and the SPDR which is the largest ETF on Tuesday night saw a 2 tonne gain to 911.13 tonnes. This was the first gain since Jun 10. The interesting aspect to the recent rally is that it looks to be supported by the existence of physical demand which is actually seeing a backwardation in futures prices emerging, which in the Gold market, a highly liquid market, is very rare.