Gold bumps up against $1,600, but weekend Spanic could see the running of the bullion bulls

While gold futures ended the week lower than when they started, the metal rose $7 an ounce during Friday’s trading to end at  $1,595.10 late in New York.

In an interview with MarketWatch, Brien Lundin, editor of Gold Newsletter, explained the day's uptick:  “Given the ongoing uncertainty in Europe, and the recent rate cuts by some central banks, many traders don’t want to go into the weekend betting against gold.  There is the very real potential of some gold-bullish development over the weekend, and therefore the risk of being caught on the wrong side of the trade with the markets closed.”

Those potentially gold-bullish developments include fresh economic data from China which over the weekend will release its industrial production for May as well as trade data. Further indications of a more severe than thought slowdown in the world's second largest economy could prompt renewed interest in gold.

The possibility of Eurozone shocks remain high and today even US president Obama weighed in on the topic: “It is in everybody’s interest for Greece to remain in the euro zone and respect its prior commitments. The Greek people also need to recognize that their hardships will likely be worse if they leave the euro zone.”

Spain is expected to ask the Eurozone for help with recapitalizing its struggling banks this weekend. Spain would be the fourth country to do so reports Reuters.

On Thursday August gold contracts fell almost $50 an ounce, crashing through the psychologically important $1,600 an ounce level following Federal Reserve Chairman, Ben Bernanke's testimony to Congress which – too vaguely for bullion bulls –  outlined that the Fed was prepared to provide further easing.

Marketwatch spoke to Adrian Ash, head of research at BuillionVault: “Gold is always a speculation on monetary policy, but the last week’s action shows leveraged traders treating it like live in-running sports gambling.”

Read more >> Bernanke, bullion, bathos and Bill Gross