In the U.S., traders are pricing a zero percent chance of an interest-rate increase in the Federal Open Market Committee’s meeting next week, and the odds of such a move stay below 50 percent until December, according to Fed-fund futures. The Bloomberg Dollar Spot Index dropped as much as 0.6 percent to the lowest since May 5.

Gold probably has bottomed and will be supported by risks surrounding a U.K. vote on whether to leave the European Union, U.S. monetary policy and elections in the U.S. and Spain, according to Clive Burstow, who helps manage $35 billion at Baring Asset Management Ltd. in London. 

Eoin Treacy's view

At the last count $7.8 trillion in sovereign bonds was yielding less than zero and with the German 10-year at around 4 basis points it might not be too long before an even larger swathe of the global debt market is in the same condition. The ECB begins its corporate bond buying program today which is likely to depress yields further. 

Against that background it is hard for the Fed to raise rates because the resulting upward pressure on the Dollar would be counterproductive. Equity markets have been quite steady over the last month, taking their cue from the bond markets, and the near-term conclusion is that interest rate hikes will be modest at best and we might have to wait for them. That suggests the liquidity on which the market has been dependent will remain in place and that is positive both for financial assets and the price of items that cannot simply be loaned into existence. 

Gold trended lower in a reasonably consistent manner between 2011 and February when it rallied, in a massive reaction against the prevailing trend, to break the medium-term progression of lower rally highs. It has been forming a first step above the Type-2 base since and found support last week in the region of $1200 and the 200-day MA. Friday’s upward dynamic and subsequent upside following through, so far this week, confirms support in the region of the trend mean and a sustained move below it would be required to question medium-term upside potential.

Silver also found support in the region of the trend mean last week and has also bounced emphatically this week to confirm the six-month progression of higher reaction lows. 

For the first time in a decade gold miners are offering positive leverage to the gold price and continue to outperform. The NYSE Arca Gold BUGS Index experienced a comparatively shallow reaction and rallied over the last week to hit a new recovery high today. A pause in this area would not be wholly unexpected considering the pace of the short-term rally but a sustained move below the trend mean would be required to question recovery potential.