Summer is usually a quiet time in gold trading. Most retail demand factors for gold happen in the Fall – such as the start of Indian marriage season – and Spring – end of Indian marriage season, and Asian New Year. But in the summer – nada. And that’s where we are now – in the middle of the “nothing” season. So we can’t expect any news of a demand increase to lift gold prices out of their recent doldrums.
Yet at the same time, we’ve seen a tremendous run-up in the US Dollar. Here’s the recent chart for UUP, an ETF that tracks the Dollar against a basket of currencies.
As you can see, the Dollar has had quite a surge the past few months. This put a lot of pressure on gold prices, as you might be painfully aware.
But now it looks like the Dollar has hit a local peak and has backed off a bit. This has allowed gold prices to move back up into the 1265 range in early trading this morning. And 1265, as we’ve discussed before, has been an important price for gold.
Over the weekend, news came out that Indian gold was trading at a premium again. Finally. This is positive sign for gold prices, as it indicates consumers think gold is cheap right now. It may indicate a floor for gold prices. Or it might just be a short-term pop.