In a 13th August blog post I noted that for the first time this year the sentiment backdrop had become decisively supportive of the gold price. I also noted that the fundamental backdrop remained unequivocally gold-bearish, and then attempted to answer the question: What will be the net effect of these counteracting forces? My answer was that regardless of sentiment there could not be an intermediate-term upward trend in the gold price until the fundamentals turned gold-bullish, but a $100 short-term rebound was possible even without a significant fundamental improvement. What’s the current situation?
The current situation is similar. Since my 13th August post the sentiment backdrop has become slightly more bullish, the fundamental backdrop has become slightly more bearish, and the price is roughly unchanged at around $1200. Therefore, it’s fair to say that the battle between bearish fundamentals and bullish sentiment has been a draw thus far.