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July brought hope, but gold price goes nowhere

by Frik Els | August 1, 2013 | Reprinted by permission of Mining.com

The gold price enjoyed another volatile session on Thursday as traders digested the metal’s best monthly performance since January 2012.

The gold price gained 7% in July, providing a little comfort to investors nursing three months of sharp losses—gold entered the second quarter at $1,600 per ounce.

By mid-afternoon gold was changing hands for $1,310, with nothing to show since yesterday’s close and giving up more than $20 of gains notched up earlier in the day.

Traders are finding it hard to glean tradeable information from yesterday’s U.S. Fed’s decision on monetary policy, which gave no indication of the future of the central bank’s quantitative easing program.

Precious metals investors had been worried that the Fed will start tapering off its $85-billion-a-month monetary stimulus, which should boost the U.S. dollar.

Gold and dollar values usually move in opposite directions and on Thursday stronger than expected industrial activity data from the U.S. boosted the greenback.

With the U.S. Institute for Supply Management’s manufacturing index reaching a two-year high in July, fears of an early tightening by the Fed were also reignited.

On Wednesday lobby group The World Gold Council attempted to inject some reality into the gold price versus U.S. monetary policy debate, saying putting too much emphasis on U.S. monetary policy “oversimplifies the issues currently at play.”

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Reprinted by permission of Mining.com

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