VINACHEM

LONDON(Commodity Online): The Gold prices are bouncing off a weak floor though last week there was an upside push last prompted by the Middle East and Ukraine tensions, according to a Barclays report. An improvement in demand can be expected supported by the the seasonally strong period for consumption but a weaker-than-normal monsoon in India could make it less stronger. The report forecasts Gold prices as :Q3 2014:$1200/oz, 2014: $1260/oz.

Gold is struggling to attract wider investment support as a lack of conviction keeps investors on the sidelines. Gross short positions are at their lowest since December 2012. This underscores the fragility of prices given the absence of a sustained significant move higher amid rising geopolitical tensions and a lack of bearish interest in gold.

Gold ETP holdings are down 43 tonnes for the year-to-date, and although flows have turned marginally negative again in August following a 12 tonne inflow in July, the pace of outflows has certainly slowed.

Retail interest in gold remains slow, with the US Mint reporting sales of 20koz so far in August, although at a similar run rate for the month last year, sales for the year-to-date have reached 433koz, less than half of the sales seen over the same period last year (2013 full year: 1.1Moz).

The latest World Gold Council (WGC) Gold Demand Trends report for Q2 2014 confirmed weakness across gold consumers. The physical balance swung into surplus q/q and y/y, driven by weaker jewellery demand and an increase in supply. Physical demand fell by 52% y/y in India in Q2 2014, and given the weaker monsoon and continued restrictions in India, although demand will improve, it is unlikely to grow substantially q/q.