gold price held firm near $1,620 per ounce Friday morning despite encouraging economic news in the U.S. and Europe

The gold price held firm near $1,620 per ounce Friday morning despite encouraging economic news in the U.S. and Europe. While the price of gold stabilized, silver rallied $0.31, or 1.0%, to $30.27 per ounce. U.S. equity markets looked to open substantially higher, with S&P 500 futures up 15.00 points, or 1.3%, at 1,164.00.

Weekly jobless claims in the U.S. fell 37,000 to a seasonally-adjusted 391,000, the lowest level since April 2 and below the consensus estimate among economists. GDP was revised up from 1.0% to 1.3%, above the 1.2% expected by economists. In Germany, the lower house of parliament voted to expand the size of the European Financial Stability Fund (EFSF), and the upper house is expected to pass the measure on Friday.

Commenting on Thursday’s gold price sell-off, Standard Bank Plc analyst Marc Ground wrote in a note to clients that “Momentum is lacking as investors adopt a seemingly cautious attitude to entering the gold market after last week’s abrupt price fall.”

Part of yesterday’s move lower in the gold price was fueled by a rare bit of encouraging news in the euro zone. The European Parliament voted yesterday to more automatically enforce sanctions against euro zone nations that do not adhere to deficit and debt limits. The stricter regulations will accompany the European policymakers’ more pressing goal of preventing concerns of a Greek default from further damaging the financial condition of Italy, Portugal, and Spain.

Indian buy physical Gold as Diwali begins

India is one of the major Gold consumer in the world , especially during the Diwali celebrations where gold is offered as gift . As the major religious festival season of Diwali begins in India, the buying of gold and silver as gifts is a common practice.It is potentially a boom time for businesses across the board, with presents such as necklaces and bracelets traditionally bought and given to friends and family.But the recent dramatic increases in price of both metals is making it difficult for many Indians to be as generous as they might want to be. After hitting a high of $1,900 an ounce in early September, the price of gold has fallen to just above $1,500.European policymakers are struggling to resolve the region's debt crisis, and such fears would normally drive the price of gold higher.But with the commodity already at such lofty heights, many investors now feel the only really safe bet is cash itself, and hence the selling.

Gold price dip below $1,600 per ounce on Thursday morning sell-off was fueled by strength in the U.S. Dollar Index

The gold price dip below $1,600 per ounce on Thursday morning sell-off was fueled by strength in the U.S. Dollar Index (DXY), which advanced 0.5% to 78.42.

Yesterday’s gold price rally coincided with widespread gains in many dollar-denominated asset classes, fueled by a 0.4% rise in the euro currency to 1.3585 against the greenback. Strength in the euro came amid rising hopes that euro zone officials were considering a more robust financial plan to stem the tide of the sovereign debt crisis. One measure being discussed would be to leverage the €440 billion European Financial Stability Fund (EFSF) to allow for additional funds to be borrowed – likely from the European Central Bank (ECB) – without increasing the actual size of the EFSF.

While the idea of leveraging the EFSF helped propel the markets higher on Tuesday, such a plan carries with it considerable risks. Most importantly, it would put German and French taxpayers on the hook for further losses should the financial condition of Greece continue to deteriorate. Additionally, it would create the potential for further moral hazard risks by other members of the PIIGS, who may not feel as much pressure to get their own financial houses in order.

Regardless of the market’s short-term reaction to the ongoing European developments, Greek sovereign debt continues to signal that a default is looming. As John Hussman, Ph.D. – founder of the Hussman Funds – noted in his weekly market comment, “The yield on 1-year Greek government bonds closed above 135%. As I’ve noted in recent weeks, the bond markets continue to reflect expectations of certain default on Greek debt. All they are working out now is the recovery rate.”

The impact of a Greek default on the gold price would be quite uncertain in the short-term – chiefly due to the potential for broad-based liquidation in financial markets. If the financial position of the euro zone were to improve following Greece’s exit, the price of gold could come under additional pressure. However, a Greek default could instead lead to further destabilizations in the European banking system, which would be bullish for the gold price in the months ahead as policy makers implemented pro-inflation policies to offset the deflationary headwinds.

China Unveils First Gold ATM

Physical gold demand in China is booming to the point that the government have decided to install gold ATM machine to sell gold coins and bars to the public , China is the second largest consumer of Gold , and the Chinese are known for being gold bugs who prefer to keeping their savings in the form of physical gold bullion...

Gold price moved sharply higher

Gold price moved sharply higher Wednesday morning, gaining $31.00 to $1,658 per ounce. After sliding 6.5% over the past two trading sessions, the price of gold moved higher on bargain hunting among investors and traders. Silver spiked higher by a huge $1.82, or 5.9%, to $32.56 per ounce. On a closing basis, gold’s sister precious metal declined 24.4% over the last six trading days. Optimism that European leaders are beginning get serious about stemming the waning confidence in the continent’s banking system helped buoy global stock and commodity markets.

Marc Faber, publisher of The Gloom Boom & Doom Report, provided his latest thoughts on the gold price in an interview with CNBC on Monday. Faber, who has been correctly bullish on gold for most of the past decade, noted that the price of gold has become “very oversold” in the near-term. “We overshot on the upside when we went over $1,900,” he asserted, and “We’re now close to bottoming at $1,500.”

Faber subsequently cautioned that if the $1,500 level does not hold, the gold price could fall to between $1,100 and $1,200 per ounce before finding a bottom. However, despite the potential for a more severe gold price correction, Faber contended that “I don’t think the long-term trend is broken.” Although he did not provide a specific gold price target at this time, Faber predicted earlier this year that the price of gold is likely to eventually surpass its inflation-adjusted all-time high of approximately $2,300 per ounce.

David Rosenberg of Gluskin Sheff – another long-time gold bull – also reiterated his positive long-term outlook on the gold price yesterday. In a note to clients, Rosenberg wrote that “The fundamentals for gold, in terms of being a hedge against the growing lack of integrity in the global monetary system have not changed one iota despite the severe falloff in recent weeks.”

Physical demand out of China boosting the Gold Market

When you are buying Physical Gold you do not care what the margin is says futures trader Lou Grasso, Millennium , a lot of the demand these days is physical demand out of China he added I spoke on your show in the middle of last week and i was an advocate in raising the margins. do i think that's really going to stop people from coming in? no. because a lot of the demand for gold these days is etf demand and physical demand. physical demand out of china and Asia is really driving the market these days. obviously if you're buying physical you don't care what the margin is."Lou Grasso told CNBC

Gold is a victim of its own success as liquidity trumps

Gold price continued to fall Tuesday, plunging $34.25 to $1,625 per ounce. Another hike in margins by the CME Group helped greased the skids of the current correction in the gold price. Today’s decline comes on the back of the price of gold posting its worst week since 1983 as broad-based liquidation engulfed the precious metals space. The spot price of gold tumbled $96.48 to $1,644.27 on Friday, bringing its weekly loss to 9.2%. COMEX gold futures slid $101.90, or 5.9%, to $1,639.80 per ounce on Friday, marking the third largest single-day nominal decline ever. With today’s drop, the gold price is now 15.6% below its $1,922.20 all-time high, reached less than three weeks ago on September 6.

In light of yesterday sell-off in gold, coupled with last week’s substantial decline, UBS analyst Edel Tully explained her reasoning for the yellow metal’s weakness in a note to clients.

“Gold is one of the few assets that remains in positive territory this year, in a sense it is one of the last assets standing, and because of this as investors head for cash they sell the assets that have performed,” Tully wrote.

“Essentially gold is a victim of its own success as liquidity trumps.”

Nic Brown, a commodities strategist at Natixis, provided his thoughts as well this morning on the move lower in the gold price. ”The rise in volatility taking place in the gold price was clearly an indication that gold was no longer a low-risk asset,” he wrote. “So there are a few signs there that would have given you pause for thought, but inevitably when the move happens, everyone is taken a little bit by surprise.”

Brown went on to say that “I would suggest that part of what is happening is a collective move away from commodities by investors. The fact that there is carnage going on across the commodities spectrum indicates there are a fair few investors who are getting cold feet at this stage and that has hit some precious metals disproportionately.”