Over the last 10 years gold has gained on average 10% in the period between early August and year end. This solidand quite consistent gain may in part underscore strong seasonal gold buying and it may in part reflect weakness in the equity markets which is often more pronounced at the end of the summer period.

By rights we should in a typical year have made gains of 8% YTD with an additional 10% to be enjoyed by year end. Gold really has been remarkably consistent as well as accommodating. Well 2011 is looking different.

Gold has gained 34% YTD and we are only one week into the buying season. Looked at a different way, gold is 27% over its 200 day moving average which indicates that it is currently over-extended. All things being equal we should have seen a correction or at least a reasonable period of consolidation but we seem to have by-passed that nicety and gold is demonstrating a keen-ness to move much higher.

In short, gold is becoming a little ungold-like in that it is pandering to mass appeal – instead of quietly performing its role as a wealth preserver.

It has been clear for quite some time that physical retail gold sales have been strong and is underpinning this market. It is also clear that despite modest buying in the West, in the East they quite literally have cannot get their hands on enough.

But the scale and speed of buying seems to exceed even those very significant factors. My hunch – which is yet to be borne out – is that there is quite probably some central bank buying supporting this market.

Although overbought, we would not be surprised to see gold edging towards fresh highs at $1914 in the next few days although it is difficult to what the stimulus will be that takes it through. At this time it is the bulls have the whip hand and it is for the bears to prove their case