In a detailed market analysis released today, financial analyst Jesse Colombo predicts that Chinese futures traders are positioned to drive gold prices beyond $3,000 per ounce, building on their previous success in spring 2024. The precious metal, currently trading at $2,738 an ounce, has already shown significant momentum following Colombo’s initial prediction in September when gold was at $2,497.
Spring Rally Sets the Precedent
Earlier this year, Chinese traders demonstrated their market influence when they orchestrated a remarkable surge in gold prices. As Colombo notes:
“Chinese futures traders drove a remarkable $400 surge in gold prices this past spring… pushing prices up by $400, or 23%, in just six weeks.”
The Shanghai Futures Exchange (SHFE) played a pivotal role in this movement, with trading volumes increasing by 400% during the period, as reported by the Financial Times.
Current Market Dynamics
The market has shown several key indicators supporting Colombo’s bullish outlook:
- Technical Analysis: Using the concept of “measured move,” Colombo projects a target of 690 yuan/gram, equivalent to approximately $3,000 per ounce
- Premium Shift: Chinese domestic gold has reversed from a $40.60 discount to a $1.10 premium over international prices
- Trading Volume: SHFE gold futures trading activity is showing renewed momentum
Physical Demand and Economic Context
Despite the price surge, physical consumer demand in China has temporarily softened:
- Overall demand fell 22% to 218 tons in Q3
- Jewelry consumption dropped 29% to 130 tons
- Bar and coin purchases declined 9% to 69 tons
However, Colombo remains optimistic, stating:
“The reality is that high gold prices are here to stay, however, with even further increases ahead as global debt, money supply, and inflation continue to rise.”
Economic Stimulus Impact
Adding to the bullish outlook, China’s recent economic measures are expected to support gold prices:
- Announcement of 2 trillion yuan ($284.43 billion) in special sovereign bonds
- Ongoing stimulus measures to address real estate and stock market challenges
- Potential long-term stimulus dependency similar to other major economies
Market Outlook
Colombo concludes with a strong positive outlook:
“The stage is set for Chinese traders and investors to continue fueling a powerful rally in gold prices, pushing it to $3,000 and then beyond. Now that SHFE gold futures have broken out of their consolidation and trading activity is heating up once again, all indicators point toward a renewed surge that could mirror or even surpass the intensity of the spring rally.”
While the projected $3,000 target represents a modest 9.3% increase from current levels, Colombo suggests this could be just the beginning of a larger upward trend, driven by both Chinese market dynamics and broader global economic factors.
Also watch the video presentation of this report:
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