• American Summer – The demand for gold is usually low during summer time in America, which is from June to September. This is another reason why the gold price has been relatively flat since the American summer started in June. This provides an excellent opportunity to buy gold while it’s still affordable, believe it or not, to do so. The gold price is expected to make healthy gains shortly before and after the summer comes to an end in America. 

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• Gold Production – Gold production has declined with no less than 12% annually over the last ten years. This will definitely impact positively on the price of gold as demand further outstrips supply in the foreseeable future. One must also not forget that the production cost of gold has doubled to more or less $500 per ounce, which makes it highly unlikely that gold price will ever go below $500 per ounce again. If this happens, most gold mines will have to close down. It will not only hamper gold production, but can bring it to a virtual standstill, considering the fact that most gold mines have to extract gold from substantial depths. 
• Central Banks – Central banks are continuing to purchase gold, especially emerging market central banks. This will most definitely place upward pressure on the price of gold in the foreseeable future. 

Given the above, there are at least two reasons why we expect to see the beginning of a renewed gold rally in August: The start of the second leg of the Indian wedding season and the end of the American summer.

Although the second leg of the Indian wedding season starts late September, more or less at the same time the American summer ends, markets usually react well in advance before actual events. This is the reason why we expect a renewed gold rally starting in August, although it might even be sooner, especially if one considers that a global economic recovery is not expected to happen soon.