Until the RBA rate cut in early May, the rally in the Aussie had limited 2016 gains for local gold investors. But with the currency now breaking back below USD $0.73, the next up-leg in Aussie dollar gold prices is underway, with the price pushing above AUD $1740 an ounce today. It is now up the better part of $300 in just four months. Hedge fund positioning is a little concerning - and suggestive of a pullback, though there is a good chance any downside will be negated by the currency, with our own modelling now putting a price target for the Aussie comfortably below USD $0.70. Rates wise we think the market is still too hawkish, and that the RBA will cut at least two more times this year, which will support demand for gold domestically, much as it is the world over, with a World Gold Council report released yesterday suggesting demand was up over 20% year on year to end Q1 2016. ETF buying was a major factor, as the chart will illustrate


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