Gold Bulls Are Back!

| August 16, 2013 | 0 Comments

goldBulls are stampeding back into the gold market…

After an absolutely dismal first half of the year, the yellow metal has found enormous buying interest in recent days.   In fact, gold is up $166 an ounce from the low set in late June and up $80 in just the past few days.

What’s going on?

First of all, recently released Chinese trade data surprised investors by revealing the country’s economy may be much stronger than many economists realize.   Imports surged to 10.9% in July while exports jumped to 5.1%. 

These are much better numbers than analysts were expecting, and it’s clearly helping push gold higher in recent trading.

But that’s just the start of it…

A World Gold Council (WGC) quarterly demand report revealed something quite shocking. 

Global consumers are using this year’s gold pullback as an opportunity to buy all the physical metal they can get their hands on.   In fact, the WGC’s report found overall Q2 2013 demand for physical gold is up 53% year-over-year.

Who’s doing all this buying?

The majority of physical gold purchases are coming from China and India.  The WGC estimates both countries will likely see demand surge to 1,000 metric tons each in 2013.  Such an increase would represent a record demand year for China and a near record for India.

But dig a little deeper and the WGC’s data reveals something even more interesting…

Q2 2013 gold bar and coin investment grew a record 78% globally year-over-year to 508 tons.  And to take it a step further, China and India saw physical gold demand explode 157% and 116% respectively.

Those are phenomenal numbers showing physical gold demand surged as prices weakened in April and June.

But don’t even start to think that individual investors and consumers are the only ones buying gold… 

Central banks continued purchasing physical gold in the second quarter to the tune of 71 tons.  While it’s lower than last year at this time, it represents the tenth consecutive quarter of net central bank buying.

What’s all this newly found data doing for the price of gold?

Take a look…

Gold

As you can see, the yellow metal rocketed above $1,350 an ounce in yesterday’s trading session.   This rapid price increase will likely prove to be an important technical tipping point for gold as we head into the final months of the year.

Short sellers are now being forced to cover while new buyers are rushing in. 

Where does the yellow metal go from here?

Given the severity of yesterday’s move, I wouldn’t be surprised to see gold trading well above $1,400 within the next few weeks.

Stay tuned to Commodity Trading Research for ongoing coverage of gold and other hard asset markets!

Until Next Time,

Justin Bennett

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Category: Gold

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.

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