Short-covering supports price recovery in gold

Gold is continuing to hold its own at close to the $1,120 per troy ounce mark. Unexpectedly weak US economic data drove gold temporarily above this mark yesterday because this reduced the rate hike expectations again for the Fed's meeting in September and the US dollar came under pressure. 

Even the renewed appreciation of the US currency in the later course of trading put no further pressure worth mentioning on gold, which suggests that sentiment towards gold is improving. Although money managers cut their net short positions in gold in half to 5,400 contracts in the week to 11 August, the majority are still betting on falling prices. 

"The price rise in the meantime suggests that speculators are covering further short positions. The selling pressure on gold ETFs also appears to be abating, they saw no further outflows last week for the first time since the end of June. Indeed the SPDR Gold Trust, the world's largest gold ETF, actually recorded inflows", says Commerzbank. 

In July, the gold ETFs had registered their most pronounced monthly outflows since December 2013.