Gold Jumps Up $30 Per Ounce In A Single Day

Gold jumped $30 per ounce in a single day. It is being considered the best day for gold since January this year. But how did it happen? Gold surged above $1,200 an ounce Monday in its best day since January, amid market intrigue surrounding a deal between Venezuela and Citigroup to swap $1 billion in cash for part of the country’s gold reserves.

“He had to pawn their gold. That’s what they’ve done. They can buy it back. They have rights of first refusal,” said Dennis Gartman, publisher of The Gartman Letter. “They went to the biggest pawnbroker of gold—Citibank.”

If you are a gold trader, you should keep a keen eye on market intrigues as reported above. You can see a $1 billion swap between Venezuelan Central Bank and the biggest pawnbroker in the world Citigroup caused a huge ripple in the gold market with gold jumping up $30 per ounce. Just keep this fact in mind that price goes up and down. Right now a retracement seems to be taking place. So whatever gain that was made will be lost soon. These type of moves are not driven by the fundamentals in the market. So they are not long lasting.

Gold on Monday saw its biggest one-day rise since January as some dealers scrambled to cover short positions and the May options expiry triggered more buying.

“It’s quite undervalued and we’ve had a long period of consolidation around the $1,200 mark,” said Mark O’Byrne, research director of bullion dealer GoldCore, noting that the breach of the $1,200 level spurred additional technical buying.

But don’t get fooled by this gold rally. As said above it is more sentiment based and will fade away soon.

The bear market in gold isn’t over yet. “Gold has certainly been in a bear market prior to today and continues to be, regardless of the rally,” said Adam Koos, president of Libertas Wealth Management Group.

From here, Koos expects gold prices to ‘stall after more wishy-washiness” out of the U.S. Federal Reserve meeting, which concludes Wednesday.

For now $1200 is a key level for gold.

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