Even though Asian econ-omies are turning around, we are seeing no pick up at all in demand in China, in Japan, Hong Kong, Korea or for that matter anywhere in Asia. And Asian demand is crucial. As the price drops, production should fall until gold becomes scarce, leading to a rebound. But don't count on that happening anytime soon. While some mines will close if bullion goes below that, others will have sold their production two or three years in advance at a better price, and will stay open.
Gold miners are up in arms over the official gold sales and the consequent low prices.
The World Gold Council says the planned IMF sales will hurt the very debtor nations it wants to help by slashing mining jobs and exports. And some U.S. congressmen are moving to block the IMF from selling its gold. Therein lies the hope of bullion bulls. As soon as you have that, sentiment will turn and prices will go up pretty quickly. Moreover, if such a move comes after a few increases in U.S. interest rates and more signs of inflation, gold could really take off again.