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This month’s rally in gold prices may not be over.
That’s because investors are still heavily betting on a decline in the value of the precious metal. When speculators overwhelmingly bet in one direction then a move in the opposite way is often the result.
Bars of gold bullion. Rob Bennett/AP Images for APMEX
On October 1, I wrote that speculators were betting so heavily on a further decline in gold prices that we’d likely see a rally. You can read the story here. Starting late January gold prices tumbled until they reached a recent low in mid-August.
However, even as the price stabilized traders held onto those so-called short positions, also known as bets on a decline in prices, and kept betting on further falls in the price.
By early October the negative bets became extreme and hence increased the likelihood of a gold price rally.
Read more via More Upside For Gold Prices
