"The selloff in equity markets reflects economic concern, which is supportive of gold," James Cordier, the founder of Optionsellers.com in Tampa, Florida, said in a telephone interview. "With so many problems globally, people think the Fed will have to wait to raise rates."

Eoin Treacy's view

It is interesting how the motivations of the Fed can be used to rationalise just about any market move. For example, I have also heard a number of commentators suggest the PBOC devalued the Yuan in anticipation of the Fed hiking rates in September. Leaving the Fed out of the picture for the moment let¡¯s look at the precious metals sector with fresh eyes.

Gold has been remonetised in the eyes of investors over the last decade, so steep declines in the value of a large number of currencies not least the Euro, Yen, commodity and Emerging Asian currencies burnishes gold¡¯s appeal as a store of value. 

Viewed as a currency, gold does not have a yield but it did get its devaluation in early; almost halving between 2011 and its recent low. It is too early just yet to say that anything more than a temporary low has been found but we can conclude a process of mean reversion is underway. A sustained move above $1140 would push back up into the overhead range while a sustained move above the 200-day MA, currently near $1180, would signal a return to demand dominance beyond the short term.

Platinum, which led the decline, pushed back above the psychological $1000 level today which further bolsters the potential for mean reversion