Paper demand driving gold higher

Gold’s story has been all about insatiable Asian demand. But there are now signs that driven by a falling dollar, paper gold traders are joining the bullish camp.

Gold and silver were in a holding pattern this week, with gold consolidating at all-time highs and silver consolidating a rally after a previous decline from early-July. In Europe this morning spot gold was $2524, up $13 on balance from last Friday’s close and silver at $29.50, was down 30 cents on the week. On Comex, gold volumes were low, while they were healthier in silver.

My next two charts contrast Comex Open Interest and the relationship with gold and silver prices: