The price of gold rises by 5% in less than three days thanks to massive purchases

In recent days the price of gold has been rising.

On Monday it hit a weekly local low at $4,510 per ounce, but today it is already at $4,740.

This is a 5% increase in less than three days, which is not exactly common for gold.

The fact is that behind this rebound there are massive purchases.

Gold purchases

The ones buying gold in recent days have mainly been the whales on the financial markets.

The gold that is bought on financial markets is actually not physical gold, but derivative financial products that replicate the price performance of the commodity.

Taking as a reference for example the market for futures, where many institutional whales operate, there appear to have been large purchases starting on Tuesday.

In fact, on Monday, while the price was falling and hitting this week’s local low, there were mainly sales, also because last week there had been some purchases in particular around $4,550 per ounce.

To tell the truth, even on Tuesday, when the US markets reopened, there were still some small sales, but after about an hour the buying started.

At first they were actually very few, almost irrelevant, but as soon as the price climbed back above $4,670 they multiplied.

Between yesterday and the day before yesterday most of the purchases were made below $4,710 per ounce, and today, despite the rise to $4,740, for now there are still no massive sales to be seen.

The short-term trend

It should be noted, however, that this trend is probably only a short-term mini bullish trend, similar to last week’s that then resulted in Monday’s sales.

In addition to this short-term rising mini-trend, which alternates with other short-term descending mini-trends, it is also possible to identify some others that are longer, and therefore more solid.

The first is a medium-short term trend that has been underway since mid-April.

This is a descending trend which, however, in theory could also end with the purchases of recent days. To tell the truth, the decline already ended at the end of April, and since then a volatile sideways phase has begun, characterized precisely by the alternation of ascending mini-trends and declining mini-trends.

The second is an upward trend that began at the end of March after the local low recorded at $4,100 per ounce, but it already ended shortly before mid-April, when the descending trend mentioned above began.

The long-term trend

There is also a third upward trend, of medium-long term, that has actually been going on for more than two years.

It began when the price of gold started to rise decisively above $2,000 per ounce.

This medium-long term trend, however, has not been constant. In fact, if observed in daily detail, numerous and sustained rises have alternated with declines, but relatively short and above all very limited.

Net of the speculative mini-bubble in January of this year, this trend is still absolutely ongoing, although that local low peak of $4,100 in March temporarily put its continuation at risk.

Moreover, already in July last year a decline followed by a sideways phase that lasted almost two months had put it at risk, but in the end the price of gold started to rise again at the end of August.

However, this is now a trend that is not only very long, but also very pronounced, to the point of suggesting that it might even be an unusually long speculative bubble.

Forecasts

According to several analysts, the medium-long term trend could continue for a few more months.

The hypothesis that has been circulating for months now is that new all-time highs above $5,500 per ounce, or even at $6,000, could be reached by the end of the year.

However, it cannot be ruled out that in the event of a “double top” a correction could then begin that might even definitively interrupt this trend.

It should be noted that last year, when the trend was put at risk, the price of gold had fallen to about $1,000 per ounce, and this means that it has increased by more than four times since then, in less than a year.

The fact is that speculative bubbles always burst sooner or later, even though it generally proves impossible to predict precisely and well in advance when they will burst, up to what price level they will inflate, and especially at what levels the price will fall after the burst.