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Gold has traded in a range between $1,600 and $1,610 so far today…as of 6:00 am Pacific, the yellow metal is up $4 an ounce at $1,607…Silver is 12 cents higher at $27.95…Copper is flat at $3.35…Crude Oil has gained 43 cents at $94.76 while the U.S. Dollar Index has shed one-tenth of a point to 82.55…

Overall Gold Demand Down But Central Banks Remain Aggressive Buyers

Gold demand fell to its lowest level in more than two years in the second quarter, the World Gold Council said today, as a drop in buying in major consumers India and China outweighed a record quarter for central bank purchases…overall Gold consumption fell 7% or nearly 76 tons to 990 tons in the three months to June, its lowest quarterly level since the first three months of 2010…jewelry and investment demand both fell substantially…jewelry consumption was down 72.3 tons at 418.3 tons while investment fell 88.3 tons to 302 tons…the WGC’s managing director for investment research, Marcus Grubb, said he still expects demand growth in the full year but that forecast was heavily dependent on Gold-friendly policy moves from central banks and a recovery in Indian demand…investment and jewelry demand from consumers in India, the world’s number one Gold market, plummeted 38% to 181.3 tons in the second quarter…buying has been hit by a hike in import duties and record-high local prices due to a weak rupee…jewelry and investment purchases in the United States fell 17% to 34.2 tons…European Union demand was a rare bright spot, rising 11% to 86.4 tons…

China To Overtake India As World’s #1 Gold Consumer

China had its first negative quarter for Gold demand in a long time as a slowdown in economic growth and a lack of clear price direction in Gold took its toll…for the first half of 2012, Chinese demand fell 7% to 144.9 tons…the WGC is predicting, however, that for the first time ever, China will become the largest Gold market in the world…while Indian demand is expected to fall to 650-750 tons this year, from 933 tons in 2011, Chinese demand is expected to rise 10% this year to 850 tons…

Central Bank Buying

The world’s central banks bought 157.5 metric tons of Gold from April to June, the highest total since the official sector shifted from net sales to net purchases in the second quarter of 2009, the WGC reported…the April-June total was more than double the 66.2 tons from the second quarter of 2011 and accounted for 16% of overall Gold demand…for the first half, central bank buying totaled 254.2 tons, up 25% from 203.2 in the same period of 2011…the bulk of this buying is from central banks in emerging and developing economies, Grubb said…the largest four buyers in the recently completed quarter were Kazakhstan, Russia, Ukraine and the Philippines…”If you look to the half-year, central banks have bought 254 tons against 200 tons for the half-year last year,” Grubb said…”At this rate, we’ll be looking at a record central bank year, higher than last year, which was a record since 1964″…

Gold ETF Picture

Global ETF holdings were roughly flat year-on-year in the second quarter, dipping by 0.8 ton…“The lackluster net figure was reflective of the directionless price action in Gold, which encouraged profit-taking and bargain-hunting in equal measure,” the report said…some might view the second quarter as “poor” for Gold ETFs since there was not an increase in tonnage, Grubb said…”But if you take the first half of 2012 compared to the first half of last year, ETFs are significantly up in tonnage terms,” he said…for the first six months of the year, ETF demand rose 52.4 tons…

Gold Supply Falls

World Gold supplies declined 6% year-on-year in the second quarter to 1,059.1 metric tons largely as the result of less recycling of the metal, according to the World Gold Council in its quarterly report…mine output changed little from the second quarter of 2011…the supply of recycled Gold declined by 12% from year-ago levels to 363.7 tons…this was marginally below the five-year quarterly average of 376.8…

Brazil Takes Smart Steps To Stimulate Economy, Turns To Private Sector

Brazil’s president Dilma Rousseff has launched a $65 billion stimulus package to spur investment in the country’s creaking infrastructure and shore up ailing investor confidence in the world’s second-largest emerging market economy…in the first of what are expected to be a series of announcements in the coming weeks, Rousseff said the government would sell concessions in nine highways and 12 railways before moving onto other areas of infrastructure…“We are starting with railways and roads but obviously we will take care of airports, ports and waterways,” Rousseff told a gathering of politicians and leading businessmen in Brasília…Brazil’s economy has slowed to a crawl over the past 12 months as inadequate infrastructure including roads and ports and a shortage of skilled labor has raised costs and stifled industry…the economy expanded 7.5% in 2010, the fastest pace in more than two decades, but last year slowed to 2.7% and this year is expected to grow only 2% or less…Bret Rosen, senior credit strategist for Latin America at Standard Chartered, said the move was a step in the right direction, with infrastructure bottlenecks posing one of the biggest obstacles to faster growth in Brazil…but he added, “The easy thing is making the announcements, the harder thing is execution, and the track record not just of Brazil but of Latin American countries in general is pretty poor on infrastructure”…the cost of exporting a container from Brazil is more than double that of China and 1.5 times that of India while the country’s ports are notorious for delays…among the initiatives, the government will sell rights for private companies to operate 7,500 km of roads and 10,000 km of railways…the measures would double the capacity of the country’s main highways, transport minister Paulo Passos said at the event…

Today’s Markets

Asian shares closed mixed overnight after global growth engine China warned its trade outlook was worsening…the Shanghai Composite fell 7 points to 2112…Japan’s Nikkei share average hit a six-week high, gaining a steady foothold above 9,000…European markets are off gently this morning, consolidating the recent rally to five-month highs…stock index futures in New York, meanwhile, are pointing toward a slightly positive open for Wall Street as of 6:00 am Pacific…groundbreaking on new U.S. homes unexpectedly fell in July and gains from the prior month were revised lower, a reminder of the housing markets weakness despite some recent signs of recovery…meanwhile, the number of Americans filing new claims for jobless benefits edged higher last week although a trend reading fell close to a four-year low…

Venture Exchange – Poised To Move Higher

John’s third chart in the last two days shows the Venture Exchange is poised for a potential sharp move to the upside following a 4-month slide that wiped 32% off the value of the market…since the 1154 intra-day low June 28, the Venture has been basing in a grinding sort of way…yesterday, it moved above 1200 for the first time in 27 sessions…this morning, we take a look at the 50-day moving average (SMA) indicator for the Venture which is a definite eye-opener…historically, a move above the 50-day and a reversal to the upside in this SMA has preceded some major moves…yesterday, the Index climbed right up to its 50-day which has started to flatten out…below is a chart that points out some major market turning points over the last decade based on important developments with the 50-day SMA…

Osisko Mining (OSK, TSX)

Osisko Mining (OSK, TSX), which reported solid second quarter results the other day, has been a reliable indicator of the direction of Gold mining shares over the last few months and appears almost ready to start a powerful “Wave 5” move according to John’s latest chart…

Wildcat Silver (WS, TSX)

With an expected jump in Silver prices during this last half of 2012, keep a close eye on Wildcat Silver (WS, TSX) which recently announced it has just over 300 million ounces of Silver in the inferred, indicated and measured categories at its Hermosa Project in Arizona…the deposit also contains some Gold, manganese, zinc and Copper…a revised preliminary economic assessment is expected to be completed by the end of this quarter…John’s chart shows the trend has turned bullish with Wildcat which is currently trading at its 1,000-day rising SMA…

Note: John, Jon and Terry do not hold positions in OSK or WS.