Gold climbed on Tuesday after data showed the U.S. manufacturing sector grew more than expected in August, lifting appetite for assets seen as higher risk, such as commodities, and boosting inflation fears.

But gains were capped by a slight recovery in the U.S. dollar and by a reduction in the metal’s appeal as a haven.

Spot gold was bid at $954.40 an ounce at 1444 GMT, against $949.65 an ounce late in New York on Monday. U.S. gold futures for December delivery on the COMEX division of the New York Mercantile Exchange rose $2.70 to $956.20.

The data from the Institute of Supply Managers showed the U.S. manufacturing sector returned to growth in August after a prolonged slump, while pending home sales raced to a two-year high in July.

The news boosted U.S. stock markets, while European shares pared earlier losses.

Simon Weeks, head of precious metals at the Bank of Nova Scotia, said the news was

Two years into our “Great Recession” (or “Greater Depression,” depending on who you talk to) gold is selling for $944 an ounce. But back in 1980 – against the backdrop of double-digit inflation in America and a prolonged economic stagnation – gold reached a peak of $850. That’s the equivalent to about $1,900 in today’s money.

Of course, the world was a very different place in 1980. Deflation is now the bogeyman stalking the global economy (although here at Notes we believe a surging asset-price inflation is not far off). And back then, there were persistent rumors that Ronald Reagan was going to bring back the gold standard and send gold, in 1980 money, to $1,000 an ounce.

But as John Katz and Frank Holmes point out in their excellent book on the subject, The Goldwatcher (2008), the supply and demand

Gold steadied today,  Tuesday, erasing earlier gains, as the dollar recovered lost ground against a basket of currencies, reducing the precious metal’s appeal as an alternative asset.

Traders are awaiting fresh direction from the foreign exchange markets after a meeting of G8 leaders later this week.

Spot gold was bid at $922.65 an ounce at 1544 GMT, against $924.00 an ounce late in New York on Monday, having earlier touched a high of $931.55.

U.S. gold futures for August delivery on the COMEX division of the New York Mercantile Exchange eased $1.20 to $923.10 an ounce.

With physical demand sluggish despite a price dip, the gold market is largely being driven by currency moves, traders said.

The precious metal edged lower on Tuesday as the dollar  recovered earlier losses against a basket of currencies. The euro, which was earlier lifted by better-than-expected German factory orders, retreated to turn lower.

“The pick-up in the dollar has put some pressure

Canadian Banking: Sober, Boring, and Successful

Ryan Cole, The Investment U Research Team

It wasn’t so long ago Canada’s banking system was considered behind the times. Almost cute, an antiquarian relic, it banked in the old ways… and it was holding Canada back.

After all, while real estate throughout the world was doubling every few years, Canadian homes were moving up relatively modestly.

While risk in the rest of the world had been eliminated through complicated instruments that everyone trusted “someone else” understood, Canada was still using the traditional loan-and-hold mortgage model…

I’m sure you see where this is going.

Canada’s banks weren’t caught up in one of the biggest global bubbles of the last few decades, and they aren’t participating in the fallout either. It’s why investors around the world are looking at Canada, and three of its banks that

Gold climbed to a fresh two-month high of $957.50 an ounce in Europe on Friday, extending the previous session’s near 2 percent gains, as investors bought the metal as a hedge against dollar weakness.
Silver prices posted the biggest gains among precious metals, however, climbing to a nine-month peak of $14.79 as investors turned to the metal as a cheaper alternative to gold.
Spot gold was bid at $956.95 an ounce at 1207 GMT, against $953.40 an ounce late in New York on Thursday. U.S. gold futures for June delivery on the COMEX division of the New York Mercantile Exchange rose $6.20 to $957.40 an ounce.
Simon Weeks, director of precious metals at the Bank of Nova Scotia, said the majority of gold’s gains were dollar-related, with investors “buying hard assets as opposed to hard currency”.
“Physical (buying) has been

…

Gold was basically comatose all through Far East and European trading…with what activity there was, beginning [as is mostly the case] once floor trading began on the Comex in New York. Volume was decent in both metals, and both gold and silver’s attempts to go vertical shortly before the London close got firmly stopped in their tracks. The usual New York gold commentator noted that a very large 80,482 gold contracts had traded by 11:00 a.m….with a total of 110,979 for the entire day.

I find it highly suspicious that the Dow hit its high of the day and the US$ hit its low of the day at precisely the same moment that the vertical gold and silver price rallies were cut off at the knees around 10:30 New York time. You can read into that whatever you want.

Well, the gold chart looked pretty bleak very early Friday morning…with gold touching the $880 level in London as I turned my computer off from writing Friday’s rant. I must admit that I turned the computer back on about lunch time yesterday with some fear and trepidation, but was pleasantly surprised that the price I’d seen last night [just before the London a.m. fix] was the low tick of the day. From there it worked its way a few dollars higher…right into Comex floor trading in New York.

But a tiny attempt to run to the upside into positive price territory, that started just before noon Eastern, ran into another not-for-profit seller about an hour later. From there, gold sold off quietly into the close of electronic trading on the Globex. According to the usual New York commentator, estimated volume was 50,990 lots with a switch effect of 7,874 contracts.

Although it

There wasn’t much activity in gold in Far East and early European trading on Wednesday morning. But by the time the Comex opened for business, gold was up a few bucks. However, every time the gold price poked its nose above $900, there was somebody there to take it right back down again.

Silver did better. It traded a few cents on either side of unchanged throughout the Far East and early London trading. That came to an end as soon as the London silver fix was in…noon in London…and 7:00 a.m. in New York. From there a rally commenced which really didn’t have much enthusiasm behind it…and it flat-lined from the end of Comex trading until electronic trading in New York was through for that day at 5:15 p.m Eastern.

Tuesday was the last day for trading the April contract in both gold and silver. There was lots of furious action

Tuesday trading in gold turned into a pretty big bear raid. As I mentioned briefly in my rant yesterday…starting shortly after Sydney opened on Tuesday morning…someone bombed the bullion market with a big sell order. The word ‘big’ is relative in this case. In the extremely thin trading that characterizes Far East gold and silver activity…a 1,000 contract sell order would hammer the market…and that’s pretty much what happened in gold. Ditto for silver.

Anyway, after the Sydney pounding [courtesy of the U.S. bullion banks out of N.Y. one would think], gold didn’t stray far away from $897…and was within a whisker of that price when trading began on the NYMEX/COMEX at around 8:20 a.m. in New York. Then it was lights out. A vertical decline like that can only occur if there is huge selling volume into a no-bid market…i.e. the traders for the bullion banks stand there with folded

There was a brief flurry of excitement in Globex trading on Sunday evening’s New York open. Both gold and silver were up right out of the starting gate…silver especially so.

The U.S. bullion banks [the only ones allowed to trade at that time of day] were either going long or covering shorts. This rally continued through the Sydney open in gold…and into the beginning of trading in Hong Kong for silver. At those two points, a not-for-profit seller showed up…or the buying/short covering stopped. Those were the highs of the day in both metals. It’s quite unusual for the not-for-profit sellers/price cappers to hit the metals at two widely separated times like this. Almost without exception, they hit both metals at precisely the same time. I should quickly point out that trading volume in New York on Sunday night…and in Sydney and the Far East early Monday morning….was basically air in