Gold exchange traded funds have rallied on higher imports in China and India, two of the largest consumers of the precious metal, bargain hunting and uncertainty over Fed policy. However, the euphoria may be short lived.

The SPDR Gold Shares (NYSEArca: GLD) was 0.5% lower Monday and touched a two-month high during trading. GLD has gained 6.2% over the past month and crossed over its 50-day moving average early August. [No Gold, No Problem for This Combo Metals ETF]

“These levels are largely technically driven. They are unsustainable,” Mark Keenan, a cross-commodity research strategist at Societe Generale in Singapore, said in a Reuters article. “We will get fresh QE tapering indications in the next Fed meeting in September. The tapering is likely going to start taking effect then and gold will fall again.”

Gold has been allowed to recover as Fed tapering talks subsided over the past couple of months. However, the bond market is positioning for a Fed intervention as benchmark yields on 10-year Treasuries break above 2.8%.

“There’s a mystery at the moment, because the bond market clearly believes that the Fed tapering is just about to start,” Jesper Dannesboe, senior commodity strategist at Societe Generale, said in a CNBC article.

Moreover, Stuart Burns for Metal Miner points out that we can’t rely on central bank gold hoarding to bolster demand. Central bank gold purchases was at 71.1 tons in the second quarter, the lowest in two years and about half the rate of 2012.

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