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According to Bloomberg, gold traders remained bullish for a sixth straight week (not that the gold price has behaved accordingly over the same period, having come within 1% of forming an official bear market) on speculation that the European debt crisis will boost demand from investors seeking to protect their wealth.

However, gold has simultaneously rallied hard on relief that all is well in Europe - following equity markets higher on Friday as they breathed an almighty sigh of relief ... perhaps there was some demand from investors buying back gold that they has been forced to sell in order to cover recent equity losses?

So ... what I'd really love to know is: on balance, is the rise in the gold price the result of 'risk on' or 'risk off' trades?

Perhaps both types of demand are there ... and that, if true, would be great news: to have, at the same time, buyers in the market viewing gold as oversold [now that the investment outlook for risk-taking looks more certain] and buyers in the market viewing equity markets as overbought who are looking to invest in gold for risk-aversion ... perfect!

An estimated $2billion flowed into the exchange traded bullion commodities in June - and certainly more into the, unrecorded, physical bullion markets.  

IMF data revealed that the central banks of Russia, Turkey, Ukraine and Kazakhstan used recent price weakness to add, collectively, 25 tons of gold to their countries' reserves during May.

Saturday June 30, 2012 by Robin Newbould