July brought hope, but gold price goes nowhere

The gold price enjoyed another volatile session on Thursday as traders digest the metal's best monthly performance since January 2012.

The gold price gained 7% in July, providing a little comfort to investors nursing three months of sharp losses – gold entered the second quarter at $1,600 per ounce.

By mid-afternoon gold was changing hands for $1,310, with nothing to show since yesterday's close and giving up more than $20 of gains notched up earlier in the day.

Traders are finding it hard to glean tradeable information from yesterday's US Fed's decision on monetary policy which gave no indication of the future of the central bank's quantitative easing program.

Precious metals investors had been worried that  the Fed will start tapering off its $85 billion a month monetary stimulus, which should boost the US dollar.

The value of gold and the dollar usually moves in opposite directions and on Thursday stronger than expected industrial activity data from the US boosted the greenback.

With the US Institute for Supply Management's manufacturing index reaching a two-year high in July, fears of an early tightening by the Fed was also reignited.

On Wednesday lobby group The World Gold Council attempted to inject some reality into the gold-price vs US monetary policy debate saying putting too much emphasis on US monetary policy "oversimplifies the issues currently at play."