Alan Williamson Recent Quotations

Yesterday's sell-off has stopped the recent uptrend in its tracks, with the (gold) price now squarely back in the middle of the broader $535-$575 range that has held since the middle of January.

Certainly sentiment towards gold now remains positive, with the market ignoring the further drift lower in the oil price and the recent strength in the dollar,

Given the increased correlation between base and precious metals over recent months, any further weakening in base metal prices would be a distinct drag on gold.

Over recent months gold and equity prices have been positively correlated. This has particularly been the case in Japan, where investors have sought to lock in stock market gains by recycling funds into gold. With equity markets weakening, local investors sought to secure gains on gold and move into cash.

There has been little clear trend in precious metals prices in recent trading, with the markets recovering when they look the most bearish and stalling when they look the most bullish.

It may well be that the stalling in the gold price rally over the last few days reflects a slowing in inflows into the various exchange-traded funds. With the major source of gold buying drying up over recent days it is hardly surprising that the gold price rally has stalled.

The market continues to hold in the middle of the $535-$575 range that has held since early January, with the most recent price action suggesting a bias towards a move higher, rather than lower, within this trading band.