The gold ‘bear raid’ still continued on Friday after Thursday saw another 2.638 tonnes of gold sold from the SPDR gold ETF on top of the 19 tonnes sold over the last 5 business days. [0.39 of a tonne was sold out of the Gold Trust] But this did not hurt the gold price in either center with gold rising back to $1,100 on Friday.

On Friday another 4.155 tonnes were sold at the close of business too. We waited to see if this sale dumped in China, once again, would hurt the gold price in Shanghai, but instead the gold price continued to rise to $1,104 ahead of London’s opening on Monday (today).

Bear in mind that the Shanghai Gold Exchange trades an average of around 40 tonnes a day so these amounts dumped directly onto the exchange, in one shot, can have a disproportionate impact [as we have seen last week] unless large new buyers enter the market to pick up such volumes. Both Friday and this morning appeared to see such buyers because the gold price held its ground and rose slightly.

Who could such a buyer be? We would opine that this could even be the People’s Bank of China or agents for the central bank or even one of the large commercial banks in China.

Will it continue to take dumped stock off the market? If so, where next, for the gold price? If the bears try to raid again through this week, we need to see what reaction this will have in China to see the way forward.

The holdings of the SPDR gold ETF are at 680.154 tonnes and 163.85 tonnes in the Gold Trust.  What we can expect is for developed world banks to continue to point to the downside in gold. After all this could either slow buying or accelerate selling in the developed world increasing profits for the bears.

Julian D.W. Phillips for the Gold & Silver Forecasters – www.goldforecaster.com and www.silverforecaster.com