Gold set to bounce back on Spanish bailout and Chinese traders back from vacation

Despite an abrupt decline in the wake of an upbeat US employment report, gold is likely to regain losses this week on several factors which should strongly favor the precious metal.

Seeking Alpha makes the point that traders in China have been absent from the market for the past week due to the October Golden Week holiday. The return of Chinese traders en masses to market this week could well push gold back to its recent highs.

The dire economic health of Spain, which has seen mass protests in recent weeks against austerity measures advocated by more robust members of the EU, could also compel the ailing Iberian nation to request a bailout from the ECB, and the ensuing monetary easing measures would also serve as a major positive for gold.

Spanish bond yields rallied at the end of last week in anticipation of a bailout request, and the country’s fragile state could see it beseeching the ECB for assistance as soon as the start of this week.

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