This morning gold has broken above $1270 on the back of weaker than expected U.S. economic data which has curbed the odds of a Fed rate hike before year end:

With sentiment on gold having reached a bearish extreme last week I envisage a scenario in which gold can rally up to the $1290-$1300 before the next consolidation takes place:

An interesting graphic via RBC illustrating the gold supply/demand balance:

This is worth studying, however, the gold price is contingent upon two primary factors: Investment demand and central bank purchases. Therefore any analysis that doesn't accurately forecast these two sources of demand is incomplete.


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