2009-08-04

Short-Covering Helped Push Gold Above USD950


















Against our expectations, gold pushed higher on the back of the much weaker US dollar. After US GDP data showed that the US economy had contracted only 1% in Q2:09 (consensus was for a 1.5% contraction), the greenback depreciated quickly, from USD1.4100 to USD1.4250. The New York gold market was caught short, and short-covering helped push gold above USD950.

Should gold stay around $955 today, we expect decent volumes of gold scrap to enter the market. But at these price levels, resistance to a move higher is once again strong. We see resistance at USD960 – USD962 and USD970.

Support is at USD940 and USD923.

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