Investor psychology for gold remains negative,
and that’s potentially bullish from a contrarian standpoint.
Sentiment towards gold remains weak as gold
backed ETF holdings fell to a new low on August 7, according to Sharps
Pixley. ETF holdings in countries such
as Japan and India, by contrast, remained stable even as gold prices plunged
this year. This throws in sharp relief
the attitude towards gold among Asian investors. As some pundits have observed, it could also
help shape the future for global gold demand.
Short covering is also coming into play, which is boosting
the price of gold near-term. Net combined non-commercial positions for
gold declined 23,518 contracts in the week ending August 6. Net non-commercial
gold positions also saw its biggest increase since August 2012 before the commencement
of QE3.
Meanwhile
the short-term chart pattern for the iShares Gold Trust ETF (IAU) is firming up
and looking more constructive by the week.
A decisive breakout above the nearest pivotal high of 13.05 (the July 23
close) would likely stimulate additional short covering.
