precious metal : September Rallies

September will see more consumption from Indian and Chinese retail buyers'' of gold jewelry for holidays and weddings, said Ma Tian Yu, a gold trader at the Bank of China in Shanghai.

The precious metal has fallen only nine times in the month of September since gold began trading on public exchanges in 1975.

Gold demand fell 16 percent in the second quarter as price swings discouraged purchases by jewelers. The drop marked the third straight quarterly decline and the lowest level of demand since the third quarter of 2004. Jewelers still accounted for 85 percent of purchases in the period.

Futures have fallen 14 percent from a 26-year high of $732 on May 12, and some jewelers are using less gold on lower-priced pieces to counter higher costs for the metal.

``It has been difficult in a rising market to use the same amount of gold by weight,'' said Mark Hanna, vice president for Bel-Oro International Inc. in New York, a jewelry manufacturer who may buy 5 percent to 10 percent less gold this year. Necklaces, bangles and rings under $200 may have less gold than previous years, he said.

Adjusting to Prices

``As long as gold was in the $400 range, the business was quite stable and very viable,'' Hanna said. ``We all have to adjust. This Christmas will be a bit of a sticker shock. But next Christmas, $650 gold will be like $400 gold two years ago.''

``Between late August and late September, there tends to be a pronounced uptrend in the metal,'' said Dan Chesler, an analyst at Charttricks.com in Wellington, Florida, who studies historical price patterns. ``That's the historical tendency.''

Chesler recommended buying this week based on movements of 50-week and 100-week moving averages for the December contract.

Traders who look at price charts say the metal is poised to rise. Since spot gold plunged to $542.45 on June 14, prices have been forming a ``pennant,'' or a triangular pattern that usually indicates prices are poised to rise or fall once the apex is reached, said Phil Roberts, a technical analyst at Barclays Capital in London.

Hedge Funds

Hedge-fund managers and other large speculators decreased their net-long position in Comex gold futures in the week ended Aug. 29, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 87,716 contracts, the Washington- based agency said Sept. 1. Net-long positions fell by 8,232 contracts, or 8.6 percent, from a week earlier.

By Pham-Duy Nguyen