Bullion's key drivers are poised to kick in soon, expert says

"The good news for gold investors is that July and August have been the seasonally weakest months for gold prices in the nearly four decades since President Nixon abandoned the last relics of an official gold standard and set the metal free to find its own price in the marketplace," says Jeffrey Nichols, managing director of American Precious Metals Advisors.

"Over these years, gold prices have typically moved higher during the last four to five months of the year, registering an average gain of some 7 to 8 percent," he says.

"Among the seasonal factors influencing gold is the jewelry manufacturing cycle as the industry gears up for late-year holiday sales in the Western world and January-February new-year sales in the Asian region - but this doesn't kick in until September, when manufacturers return from summer holidays.

"Of more immediate importance, the festival calendar in India also has a strong, often stronger, seasonal influence. ... This year with gold-buying set to pick up in the weeks prior to the Raksha Bandhan holiday on Aug. 24 and continuing to Diwali on Nov. 5, Indian gold demand could be a key factor pushing gold higher in the months ahead. ...

"The key gold price drivers this year remain the difficult economic situations in both the United States and Europe. ... As Europe's sovereign-debt crisis will heat up again, we expect another wave of gold buying will push the yellow metal back to and above its recent historic high."

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