Wholesale gold edged back from last week’s two-month closing high on Monday morning, recording its best London Gold Fix since June 18 above $1,375 per ounce.

World stock markets slipped, with Indonesia dropping 5.5%, as major government bond prices also fell, driving interest rates higher.

Ten-year U.S. Treasury yields rose to 2.86%, a fresh two-year high.

Alongside the gold price, now some 16% above late-June’s two-year low and recovering nearly all that month’s plunge, industrial and agricultural commodities also slipped back from their recent rally.

“The rest of the precious complex is starting to confirm the price action in gold,” reckons Bank of America-Merrill Lynch analyst MacNeil Curry, pointing to the 13% rise in silver prices last week – the best Friday-to-Friday since 2008 according to BullionVault data.

Secondly, Curry adds – and forecasting a short-term rally in the gold price to $1,410 or $1,450 per ounce – “the rampant unwinding” of gold investment through the giant SPDR Gold Trust is now “stabilizing” after the fund shed 20% of its bullion between April and July.

During the second quarter hedge-fund manager John Paulson halved his leading position in the New York-listed SPDR Gold Trust (ticker: GLD). That one-million ounce exposure was re-opened, however, through a series of derivative contracts according to a “source” quoted by the Financial Times.

Last week saw the GLD add bullion for the first week out of 33 so far in 2013, growing 0.4% from the previous Friday’s four-and-a-half-year low of 911 tonnes.

“If ETF holders aren’t selling and other holders aren’t selling then the price will have to rally to curb some of this jewellery and small bar and coin demand,” says Matthew Turner at Australia’s Macquarie Bank, noting the greater than 50% jump in global gold jewelry, coin and bar demandreported for the second quarter by market development organization the World Gold Council.

“[Gold] has generated a buy signal on the weekly chart,” says the latest technical analysis from London market-maker Scotia Mocatta, “with [last week’s] close above former July weekly high of 1348.”

“Gold is currently lightly overbought,” said long-time bull, wealth manager Marc Faber to CNBC on Friday.

“About 10 days ago, gold mining shares became incredibly cheap in terms of gold. [But] I have a preference for physical gold owned in a safe deposit box outside the United States.”

Data released late Friday showed speculative traders in U.S. gold futures raising their net bullish position – as a group – by a massive 18% in the weekending last Tuesday.

“Is gold overdone on the upside?” asked Tocqueville Gold Fund manager John Hathaway, also on Friday.

“It was ridiculously oversold…If you take a longer view, the rationale for being in gold is the prospect of monetary debasement.”

Former SocGen strategist and long-time gold advocate Dylan Grice, now at London-based investment company Edelweiss, writes that “Money is the primary toy of today’s naive interventionists. They will play with it until they break it.

“Now consider gold. In ten years’ time, gold bars will still be gold bars. In fifty years too [and] in a thousand years from now, and [with] roughly the same purchasing power.”

Looking ahead to the Denver Gold Forum in four weeks’ time, “We’d encourage shorter-term investors to consider getting long” of gold, says a recommendation from analysts at investment bank J.P.Morgan, noting the metal’s typically strong performance in September.

About Adrian Ash

Adrian Ash runs the research desk at BullionVault. Formerly head of editorial at Fleet Street Publications – London’s top publisher of financial advice for private investors – he was City correspondent for The Daily Reckoning from 2003 to 2008, and is now a regular contributor to a number of investment websites.

…..most investors never learn.