Jewellery Demand Will Continue To Fall As Gold Price Rises

Gold raced to over USD1,000 yesterday in a move which was widely anticipated. While some consolidation and even a short-term pull-back towards the mid-USD980 is possible, we expect more upside as we head into Q4:09. Much of the move has been driven by technical buying, and the dollar assisted by sliding from USD1.4330 to USD1.4430.




















Base on Standard Bank report, expected the dollar to weaken to USD1.50 against the euro on a 6-month horizon. Despite bullish view on gold over the next few months, I still doubt that the move over USD1,000 will be sustainable, as jewellery demand will continue to fall as gold price rises.

There will be few data releases today. Gold could therefore be volatile between support and resistance levels. I see support at $994 and $985, and resistance at $1,008 and $1,015.