Gold investors took a knock last week as the yellow metal descended to a level not seen for a couple of months, but it does seem to have made at least a minor recovery since.

The downturn was probably down to the strong dollar (again) and the first drop in gold ETF and ETC holdings seen for some time, although given the steady climb in ETF offtake over the past year the fall, which seems to have steadied since, has not been of any real significance in percentage terms.  Although perhaps the fact that the ETF holdings have been pretty flat for a couple of weeks, after a steady rising trend, may be affecting sentiment.

Let's face it - the stock market in general, and gold and gold stocks in particular are reliant on the three Ps - perception, perception and perception.  If investors feel that the market and investment in general is vulnerable to further sharp downturns then gold has tended to come to the fore as a perceived safe haven and wealth protector.

What we have seen, ever since the lead up to the G20 meeting in London, has been world leaders trying to talk up the economy and some of this hot air, stimulated perhaps by some very minor possible indicators that the worst may be over, has been having an effect on the ever-optimistic investment sector.  Politicians are well aware of the power of perception and spend great time, money and effort in putting their ‘spin' on events and the concerted ‘spin' following the G20 has been having an effect.

But politicians' statements nowadays are viewed with ever increasing scepticism as the public becomes better informed.  It won't take much in the way of bad news to reverse the current perception that we may be at the bottom of the market - or that perhaps the recent upturn in base metals prices - notably copper - may have been overdone given current circumstances.

There are still plenty of gold believers out there who are looking for a gold price of $1,000 or more in the near future, and while this may also seem to be unlikely on the metal's recent price patterns, with the slow northern summer season almost upon us, it won't take much in the way of bad news to revive the safe haven interest again.  There are certainly those who talk of a fall-off back to the $800 level or less, but recent price patterns do seem to suggest that a range of between $850 and $950 may be the pattern over the next few months.If there are no serious signs of a major improvement in the economy in the second half of the current year - and many observers now believe that any significant recovery may yet be a year or more away - then perceptions will likely favour another surge in gold.  Certainly the Western manufacturing sector is showing no signs of recovery yet and hopes rest with China and its stimulus programme to see us through.   Industrial metals prices have been boosted by Chinese stockpile buying, but as soon as this falls away - and it will - gloom could yet descend on the base metals sector again, and those who have perceived this sector as a better bet than gold or silver - and switched accordingly - may rapidly switch back, and gold could come back into its own later in the year.