Which Way Is Gold Moving ?

Gold for August delivery closed at $675.10 an ounce on the New York Mercantile Exchange. August gold, which gained more than 2% last week, touched a three-week high recently at $679.50 before ending that session slightly lower.

The dollar cut its losses during part of the trading session after the Institute for Supply Management reported that the nonmanufacturing side of the U.S. economy grew at a robust in May. The gold prices move in the reserve direction of the dollar. The dollar has been bouncy lately, keeping the gold prices at bay.






Recent factors affecting gold prices

• Bank of Spain has sold over 25% of their gold reserves in 3 months into the market, holding the Gold prices from upward movement.
  
• With the Indian marriage season now stopping, Indian retail demand for gold will drop too, causing the gold prices to stop rising furthur. However the investment buyers hold the key. With supply and demand slowing right now, the investment buyer is in a position to swing the price. The funds will follow the lead of these buyers.
  
• Another important factor which may have been overlooked is the increasing likelihood of strike action by the 280,000 miners in South Africa. This is because South Africa is the largest producer of gold and platinum in the world.