As I write spot gold continues to fluctuate between $787- $802 an ounce since last weeks close. Remembering that the yellow metal has dropped from $970 an ounce since July 22^nd, less than 20 trading days, who can doubt that this is a severe set back for even the most ardent gold bulls, and that includes ourselves.

At the same time commodities of every hue have followed suit, seemingly ignoring likely global demand/supply fundamentals but led by the conception that looming recession in the US and other Western countries will encompass the remaining global economies.

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We made a stupid mistake last week by forgetting that the stock market rarely responds to rational thinking. As a result gold fell very sharply.

On the basis that the US economy is looking to get sicker as each month goes by, that the dollar is arguably no stronger a currency than the Euro and certainly weaker than most other leading currency, sterling excepted.

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Last week platinum sank to a six month low. Today in European trading spot gold followed suit falling from $914 an ounce to $900 an ounce at 0830 ET.

The yellow metal staged a recovery to $904 an hour later but in the short term it is anybodies guess where it will go from here.

If gold hits the skids, the next stop will be the $850 level but, fingers crossed, resistance at $900 will continue to hold up.

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After briefly crashing through the $900 level gold has quickly recovered to $915 at 11.00 am E.T. today, Thursday.

It looks as though our previous best guess that $905 would prove the low point was a good call.

We anticipate that the price will fluctuate either side of $915 until after mid September by which time the fundamentals pointing to a break to above $1000 assert themselves.

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Gold and silver are looking set to continue moving up over the next few days mainly due to oil firmness with hurricane Dolly (maybe) disrupting supply in the Gulf of Mexico and a deadlock in the Iranian talks.

Add this to the continued weakness of the dollar and only hot air from the Fed that does nothing to give us hope that the economic woes of the US are being addressed must surely raise the expectations of us gold bulls that the yellow metal will shortly break through the $1000 an ounce barrier.

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Even though oil reversed course yesterday, the ongoing weakness of the dollar and the worsening signs for the US economy, particularly the banking and financial sector, is adding to appeal of both metals.

Readers will know that we have reservations about the dependence upon technical analysis that many market players rely on but on this occasion our resident analyst has brought to our attention numerous indicators that point to gold and silver ascending the heights starting now.

In other words gold and silver are on their way up sooner than we expected. 

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Gold eased back a little in Fridays European trading as the greenback steadied against the Euro and sterling and oil was a fraction down after reaching an all time high a shade off $146 a barrel the day before. What we are seeing is gold consolidating at this level.

In a nutshell nothing much happened in precious metal, currency and oil trading while the US enjoyed the Independence Day holiday.

This is an indication that the US has not yet lost its role as by far the most important and influential prime mover of markets.

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In European early morning trading gold and other precious metals have continued to prosper. Gold has held above $930 an ounce, spiking at $935 before falling back to just above $931, before renewing its assault on $934 an oz.

All the factors that we have mentioned in past weeks still hold good.

A plunging dollar, a soaring oil price and political and military uncertainty throughout the world and not forgetting the threat of food shortages and accompanying inflationary price pressures on man’s basic needs.

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South Africa’s miners are still on course to strike in July, likely to sustain Platinum’s continuing rise in price.

The concern here is that more labor troubles on top of power supply disruptions, coupled with skill shortages, rising transport costs etc. etc., make investing in South African producers a highly dangerous speculation.

It is not surprising that talented mining engineers are abandoning the country for the political and social stability of countries such as Australia and Canada.

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Gold remains trapped in the price band of $850-$900 an ounce but seems set to bounce off the lows for the time being.

We expect a degree of volatility within the band and that will give opportunities for quick in an out trades. Just don’t be caught short of the metal when it makes its expected break to the upside.

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