• London 2012 Olympics upon us but the boost to gold demand from Australian athletes still quite limited.
• The gold price eased by 0.4 per cent over July, and following a rally late last week, has fallen back to around US$1,590 per ounce.
• It is difficult to know what direction the gold price will take in the near term, though the outcome is likely to be influenced by announcements of further policy easing in either the US or in Europe. Markets have so far been disappointed by a lack of detail surrounding any stimulus plans; if they were to eventuate, gold’s appeal as an inflation hedge would increase.
• Partly boosting the near-term outlook for gold is the expectation that Indian demand will pick up ahead of the wedding season.
• We have left our forecasts broadly unchanged this month. In quarterly terms, we expect the gold price to average around US$1,550 per ounce over the September quarter 2012. Thereafter, upside risks to the gold price are expected to dissipate as the global economy strengthens.

For further analysis download the full report.

• Gold market update – August 2012 (PDF, 252kb)