Yesterday most commodities experienced a rally on the news that the Saudi Arabian King Fahd passed away. But I expect a continuing rally, especially in the gold market.
August futures of gold closed just over $430/oz yesterday, higher for the fourth strait session. This is also the highest the metal has closed since June.
Gold has made three higher lows ($410 in February, $415 in May and $420 in July) and has built a solid foundation now to test the old high of over $460.
The recent news of strikes and falling reserves will push the yellow metal higher.
Two countries, Russia and Kazakhstan, have reported significantly lower reserves.
According to the National Bank, Kazakhstan’s gross reserves and funds decreased 1.8% to just under $13 billion in July.
And the department for public relations of the Central Bank of Russia reported that gold and currency reserves of the country on July 22 amounted to $142 billion compared against $142.1 billion on July 15.
Is also appears that a South African strike against the mining industry is inevitable.
South African mediators from the Commission for Conciliation, Mediation and Arbitration (CCMA) are making the last attempt to avert a strike in the gold mining industry. But it doesn’t look good.
The trade unions have already requested a strike certificate.
If a resolution is not agreed by today, CCMA will issue a strike certificate.
All of this leads me to believe that we’ll see $440 gold with in the coming weeks.
Platinum is also making its move.
Yesterday the metal broke through the $900 mark. Today platinum reached a 15-month high of $913.
Continued demand from China and the revaluation of the yuan pushed the price skyward.
– Luke Burgess