Gold price up, moves above $1,100/oz

Otmane El Rhazi from The Bullion Desk.

Gold moved above the psychologically important $1,100 per ounce level in Monday’s afternoon trading for the first time since July 31.

The spot gold price was last at $1,106.9/1,107.5, up $13.20 on the previous close.

Trade has ranged from $1,089.8 to $1,109.0 so far.

“Gold has broken out of its sideways channel on reduced dollar strength following weaker than expected US jobs data. Although this is unlikely to be a sustained upside correction with the FOMC rate decision a constant inhibitor, the COTR data highlights the potential for further short-covering to bolster prices,” Tom Moore, FastMarkets analyst, said.

The net long fund position (NLFP) in gold has increased by 5,435 contracts (or 19 percent) to 29,900 from 24,465 contracts in the week ending August 4, according to the latest CFTC statistics.

The increase in the net length for the first time in six weeks was mainly driven by short-covering (-3,620 contracts) that was further reinforced by long accumulation (+1,815 contracts). The net length is down about 74 percent in the year to date.

On the downside, holdings in exchange traded funds (ETFs) have continued to fall. Holdings are now down to 1,519 tonnes, a comparably small drop compared to recent figures, but still at 2009 lows.

This morning, economic data out of Japan was mixed with bank lending rising 2.6 percent, the economy watchers sentiment was better than the previous month, but consumer confidence edged lower. In Europe, the EU Sentix investor confidence index was 18.4, lower than forecast. From the US, the labour market conditions index was better than expected at 1.1.

In the other precious metals, silver moved above $15 for the first time since July 31 – it was last at $15.08/15.13, up 29 cents. Platinum at $981/986 was up $22 and palladium at $604/609 was up $6.

(Editing by Martin Hayes)

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