A quiet week, with gold still holding the Euro's hand or is it the Euro holding gold's hand? Right now it is around $7 ahead of the Euro. The Gold Price at the time of writing was $357.75.

Physical demand is still there, with India's economy and prospects burgeoning beautifully. The current undersupply of "Official" gold keeps supply low, with trading volumes low, and the mood in the market is that the $350's are just fine. Some call it directionless, but for us this time of year this is a pretty good price to see. Some observers are nervous with the gold price sitting on the trend line, but whenever it gets too close, it jumps away from it, back up into the fifties. It had better keep doing that to keep all convinced! Right now it has fought its way back up from the forties into the mid to upper fifties again and is standing strong and this, in the face of long liquidation after last weeks terrific jump. But there is a quiet, is it before a storm? There is a feeling of convergence of background factors which could precede a dramatic move, a time of possibly greater short term risk than seen of late. Will the market leap up or down? If this feeling is right, the market will not be a place for the faint hearted! For sure we should be looking around at all the factors carefully. India seems to be catching a lot of attention:

India

The Indian rupee closed at a 33-month high today. Seemingly gold prices in Rupees continue to drop, whilst India moves through summer better than seen for some time, not only on the agricultural front. India's economy is enjoying a boom in the economy where GDP estimates have been raised from 6% to 7.1%. The Stock market is up nearly 30% since May. Bombay, appears to be strongest regional bullion market, basking in the new found wealth of the nation on all fronts. No wonder they are expected to buy more gold than ever before. With harvest time only around two or three weeks away, the gold market stands braced, to bring bullion, in buckets, to Bombay.

The Recovery in the States?

In stark contrast to India, the expected growth rate in the U.S. has been pushed up to an expected 3.5% up from 1.5 at the beginning of the year, quite a way down from the confidence inspiring growth levels of 7% and 8% in India and China. But confidence is the key, and still not being felt inside the States overall, as shown in the anaemic rise in the Indices. They will have to do far better than that to convince U.S. citizens that real growth is back. Or is it that these high expectations have already been factored into the price levels and are slowly being disappointed? Even in the housing market, mortgage applications jumped before rising interest rates deprived many of their chance to buy homes, whilst re-financing dropped for a fifth week in a row, nearly 60% off their recent peak.

The average 30-year fixed rate rose for a sixth week in a row, up around 1% since June and now above 6%. Fannie Mae projects that re-financing next year will result in total originations at half of the anticipated total for 2003, at $1.7trillion.

It was such a short while ago that grave warnings were being sent out by all. They haven't gone away. Indeed the august I.M.F. has issued a clear warning, in its annual review of the US economy, that if the US doesn't do something about its budget deficit, the economy will continue to fail to meet its potential. The Fund said that the budget deficit could reach 6% of GDP in 2003 and that the economic recovery has been uneven, with risks persisting to the downside. It sounds like we are heading to stagnation or worse. What is needed more than anything is confidence to boost morale, but instead creeping doubts devastate the shoots of confidence that do appear, so easily. In such a climate these doubts inevitably find security in Gold.

De-hedging

Global hedge positions, according to Virtual Metals, shows de-hedging of 155 tonnes in the second quarter. Were this to be annualised, it would total 622 tonnes, nearly 50% more than last year. So far the global hedge book is now down to 2277 tonnes on a 'net delta basis', down from 3166.4 tonnes in September 2001.

De-hedging has added 124 tonnes to demand each quarter in the last seven quarters, a total of 871 tonnes over the last 21 months, according to Virtual Metals.

The head of Newmont Mining, Mr Pierre Lassonde believe de-hedging will continue at the rate of 400 - 600 tonnes a year until a 'net delta' total of 1,000 tonnes remains. This equates to another two to three years of aggressive de-hedging, or removal of that amount of newly mined gold from the market place.

Credence has been given to these reports by the words of other mining companies, such as Anglogold, who intend, if they get the company, to close 78 tonnes of hedges from Ashanti alone, in addition to their own aggressive de-hedging programme. Barrick has disposed of 37 tonnes of late, whilst Newmont itself has disposed of 153 tonnes worth.

The Central Bank Gold Agreement.

In the light of recent media comments on the Central Bank Gold Agreement, we have produced an article the "Washington Agreement", its future and the certainty of its review in September 2004. It can be read on this and other main Gold Internet sites. If you wish to receive a copy, please contact us [ gold-authenticmoney@iafrica.com ]

The subject of Central Bank's, future sales is becoming more and more topical, the closer September next year comes. For certain it will be one of the most decisive events in the gold market seen since the formulation of the agreement in the first place. The debate on the subject will heat up, with many trying to say the Central Banks want to 'dump' their gold on the market if allowed to, by the expiry of the agreement and others who say such an expiry would precipitate a gear change price rise because of a lack of sellers. Every gold investor needs to know this subject!

Speculative Net Long Positions.

Comex long positions leapt again to a massive 343 tonnes last week, but may already have cooled off by the disposal of 100 tonnes by now, this week. In the face of these movements the gold price has kept within a remarkably small span. Speculators could find power to their arm and a disproportionate impact on price movements, in this quietening market. Maybe they will find more power than they have had since the run up to the Iraq war?

Short Term Prospects for Gold

• The gold price is moving in an ever tightening band again. Are we ahead of a dramatic move? Like the intensity before a storm, one feels the pressure building up. Certainly a time for greater risks and maybe greater rewards?
• The Euro stands at 1.1334 to the U.S. $ Quo Vadis?
• None of the fundamentals have changed and it all looks solid! But short term - be careful out there!
• Through "Changing Tack - Gold & Precious Metal Shares" and "Changing Tack" services, we give precise price levels we expect to see. We have been extremely accurate to date and hope to continue to be so! We send our publications out by e-mail.
• Our "Market Alerts" alert Subscribers to take what we see as the best positions in the market. We always communicate on Technical Analysis by e-mail [for the [personal touch], the moment a market signal is given to take action, so helping them to benefit from both the rises and falls in the market place. Our subscription details are above.

"One-on-One" Market service."

Through our "One-on-One" service guide our Subscribers on a personal and a daily basis, on the full range of Commodities, Equities, Bills and Bonds. Interested? Contact us for details! Our short term view on West Texas Light is here shown as a sample :

OIL PRICE (WEST TEXAS LIGHT)

MONTHLY (176.64): The 34-month indicator started to rise and reached 18.3 but is now falling at 18.1. The monthly Mesa high is in November followed by a decline to June 2004. The attached monthly chart shows that the price was turned back by the previous high, but is still managing to hold its upward trend which would be reversed by a month end close below $28.25. The + 47 month cycle is next expected to make a low in the first quarter of 2006.

We can't be emphatic but it does seem as if the price may attempt to reverse down. In this event we would look for a test of the low, just below $20.

Gold Fix 8th August a.m. $353.50 E 311.591

Gold Fix 31st July p.m. $353.95 E 312.125

Please note the .m. fix is only 80 US cents lower than last week and E 1.86 lower.