Today’s AM fix was USD 1,286.00, EUR 981.53 and GBP 843.45 per ounce.
Yesterday’s AM fix was USD 1,279.75, EUR 975.79 and GBP 842.00 per ounce.
Gold rose $8.00 or 0.63% yesterday and closed at $1,283.70/oz. Silver climbed $0.06 or 0.31% and closed at $19.38.
Gold edged up in Asian and European trading and is on track for a marginal gain - its second consecutive weekly gain.
The rally has made some shorts scramble to cover their positions but there remains a very high risk of a significant short squeeze that will propel gold prices higher in the coming weeks. This is due to still robust demand for physical gold in much of the world including India and China.
Detroit's bankruptcy is a harbinger of things to come as large states, such as California and Illinois, are also very vulnerable to bankruptcy.
Many American cities and states have been living well beyond their means for decades and this is finally coming home to roost. This will exacerbate the already very poor fiscal position of the U.S. with its nearly $17 trillion in national debt and over $80 trillion in unfunded liabilities.
Fed Chairman Bernanke clarified his somewhat confusing recent position to the U.S. Senate Banking Committee by emphasizing that there is no set timeline for winding down its QE program.
Bernanke continued to be contradictory yesterday and as ever, it is best to watch what central bankers actually do rather than what they say.
Interest rates remain near zero and are set to remain there for the foreseeable future and this will lead to continued diversification into gold.
However, we are now in the summer doldrums and there is an increasing lack of liquidity and this could result in a further bout of gold weakness and gold testing support at $1,200/oz again.