Commodities | Jun 23 2006
By Greg Peel
Was it just a dream? If we forget everything that ever happened to gold when it went through US$600/oz last time then programming has perhaps returned to normal.
Barclays Capital reports gold buyers from both ends of the spectrum appear to have returned since our little correction, which tends to suggest things might be back to some sense of normalcy. Not only has the US dollar started to weaken like the world has expected it to do, but, feeling a bit left out of global geopolitical tensions, North Korea has decided to fire off some more intercontinental ballistic pop-guns.
There are signs that speculative gold investment has returned, with buying in exchange-traded funds (which set the whole thing off in the first place) apparently returning once more. There are also signs that gold fabricators have rushed to stock up, as it was at this price jewellery demand in India and the Middle East dried up on the way through.
Barclays warns that from a technical perspective, US$600/oz may be a hard ceiling to break. Prepare for a pull-back from this level before the bounce is ratified, says Barclays. If it sails through – look out.
Now that new margin call levels have been established on gold futures (the futures market is the biggest gold market) gold buyers have reorganised their accounts. It is currently hard to find a commentator who is bearish on gold.