Gold erases early losses as bargain hunters once again buy the dip

NEW YORK (August 6) Gold prices are trading around steady near midday Wednesday, while silver prices are modestly up. Some early profit-taking pressure was met by bullish gold traders buying the dip and doing some bargain buying. Somewhat improved trader/investor risk appetite in the general marketplace at mid-week did limit the upside in both safe-haven metals. December gold was last up $0.60 at $3,435.50. September silver prices were last up $0.182 at $38.01.

In overnight news, Bloomberg reports gold bullion stocks held in warehouses linked to the Shanghai Futures Exchange have jumped to an all-time high, a sign of resilient demand for gold in China. More than 36 tons of gold bars have been registered for delivery against futures contracts, with traders and banks taking advantage of a price gap between futures and physical gold. John Reade, senior market strategist at the World Gold Council, said "This shows how strong gold trading demand is in China right now" due to a surge in arbitrage activity triggered by heavy demand for futures. Traders and banks have moved to take advantage of the price gap, buying cheaper gold on the spot market and delivering it to the exchange’s warehouse. From there, it can be used to offset sales of futures, allowing them to close positions at a profit, said the Bloomberg report.

The key outside markets today see the U.S. dollar index lower. Nymex crude oil futures are higher and trading around $66.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.218%.  

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