Technical Buying Sends Gold Soaring Posted by Brian Ford on May 20, 2013
A spur-of-the-moment buying frenzy by institutional traders sent gold soaring from $1341 to the $1400 per ounce range this morning, as technical charts and data showed gold was near the bottom of the current trading range and poised for a jump. Gold was reluctant to reach the $1350 per ounce mark, but after surpassing that level it quickly shot to $1400 on heavy buying by banks and money managers before retreating to a respectable $1387 by 2 pm EST.
“Today’s rise of the gold price to the $1400 mark was initiated by large-scale traders who discovered a promising profit-to-loss ratio in the charts,” the Certified Gold Exchange research team said in a note to brokers. “The institutions’ decision to get off the sidelines sparked confidence in household investors who responded to the banks’ investments in gold derivatives by augmenting their own physical holdings of gold bullion and coins.”
Today’s meteoric rise to $1400 could signal a new wave of price increases, according to some gold market analysts. Consecutive weeks of losses had discouraged some investors from increasing their gold holdings, and even prompted some to reduce the amount of gold in their portfolios. Today’s market movement, however, could translate into a reversal of recent trends that saw gold fall substantially during the last month. According to one member of the Certified Gold Exchange research team, Walter Fry, gold could climb as high as $1500 per ounce before the end of June “if physical buyers continue to support the market and derivatives investors don’t get skittish about rapidly-rising spot prices.”