On Monday gold became almost 80 USD more expensive in no time and it is now listed north of 1,200 USD per ounce once again. At first sight there was not really a clear indication as to what caused the sudden surge in gold.

But gold was not alone. Silver jumped up by no less than +17%, which has never been recorded in the history of the precious metal. Trading volume was significant, but some analysts were thinking about the manipulation of the gold price regardless.

The situation looked really bad after the Swiss ‘nein’ on the referendum, but after the announcement that India is completely (!) lifting all restrictions on gold imports, things started moving quickly for precious metals.

Moves In The Gold Price

The reason why the moves in gold and silver were so strong is because of the fact that investors with short positions were in a hurry to buy back their positions to minimize their losses; a textbook example of a short-cover-rally.

By structurally pushing down the prices week-after-week, month-after-month, shorters cornered themselves, because there will always come a point when the market is completely sold out. It seems like that time is now.

Not only did gold break through the crucial 1,200 USD per ounce level (again), but it also convincingly broke through the 50-day moving average! The strong volume over the full month of November is also typical for bottom formation.

Gold’s next target? 1,275 USD per ounce (200DMA).