All trading involves risk. Losses can exceed deposits.

Can gold’s August rally last?

Commodity markets, like equities, are currently experiencing a bit of a wobble.

All trading involves risk. Losses can exceed deposits.

A scarcity of economic data and an absence of corporate news to digest will no doubt have contributed to the current uncertainty. This has contributed to the volatility in gold’s spot price, though ultimately the precious metal is continuing its general recovery.

The gold price recovery can arguably be credited to two main factors. Firstly, almost all of the major gold-mining companies have written down their holdings in the asset over the last couple of months. Secondly, we have seen an upturn in the demand for the physical product. This increased demand has coincided with an upturn in economic data from China.

In the background is the worrying performance of the Indian rupee, which has dropped over 20% against the US dollar since May. Behind China, India is the second largest consumer of gold and its diminishing spending power is something traders should to keep an eye on.

Spot Gold (DFB) chart

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.