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Mini Squeeze in Gold Pushes Prices Up as Short Sellers Pull Back

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Mini Squeeze in Gold Pushes Prices Up as Short Sellers Pull Back

Gold entered a minor contraction while prices rose significantly as short sellers rushed to cover their positions. The precious metal has shown extraordinary strength, climbing to $134 since its last low of $2,544 on November 5.

Short Sellers Face Face Mounting Pressure

Market data reveals a significant reduction in futures market positioning, with open interest decreasing by approximately 43,000 contracts during the recent price rally. Contracts are closing and prices are rising, clearly indicating that short positions are closed at a loss. This technical dynamic is driving the current market movement and suggests stronger fundamentals ahead.

Mini Gold Spin (credit: PR)

Technical Breakthrough

The gold market showed particular strength as follows:

  • A decisive break above the 50-day moving average
  • It is approaching the $2,700 level with minimal resistance
  • Maintaining bullish momentum despite previous technical hurdles

Gold fell above the 50-day moving average without even the slightest hint of resistance in this line; This is a strong indication that the final price floor can be firmly established.

Market Effects

The mini squeeze scenario reveals several important market dynamics:

  • Short positions are forced to be closed at increasingly higher prices
  • Bullion banks are losing money from their short positions, although not at crisis level
  • Market structure appears to be shifting in favor of higher prices

Looking forward

Although the current squeeze has been characterized as a “mini” rather than a major market event, its effects on future price movements are significant. This move likely represents a mid-range bottom and suggests that gold prices are unlikely to return to recent lows unless there is a major financial crisis.

This is indicative of a solid mid-range base for Gold. Any future declines will likely be temporary and transitory, presenting ultimate opportunities to make real money before potential significant market moves.

In conclusion

Current gold market dynamics present a compelling case for a sustainable rise, with technical indicators and market positioning supporting the bullish thesis. The combination of short-covering, strong technical action, and market structure suggests that gold’s recent price action may be more than a temporary rally.

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This article is for informational purposes only. The opinions and analyzes contained herein are those of the author and do not constitute financial advice. Jerusalem Post (JPost.com) does not endorse or recommend any investment based on this information. Investors should consider their financial situation, investment objectives, and risk tolerance before making any decisions. It is recommended that you consult a qualified financial advisor. JPost.com is not responsible for any investment losses resulting from the use of this information. The information provided is for educational purposes only and should not be considered trading or investment advice.




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