Reasons that gold could be getting ready to break through 1300

price of gold

After bouncing off of the year’s high of $1300 last month gold has settled back down to 1240. Gold has been bouncing back and forth between the $1200 and $1300 range since the beginning of the year since bottoming out at $1150 in December.

There are several fundamental and technical reasons to believe that gold is ready to break through the $1300 level and then the sky could be the limit.

The most staggering statistic in the last month is that India bought more that 20 thousand tons of gold in one day.  A great deal of this has to do with their loss of faith in the United States dollar. There is an important holiday in India named the Akshay Tritiya holiday that pushed gold purchases up by more than 30%.

Last year in India there was a protest against selling gold in India, but since that protest has been lifted gold sales have risen by more than 30% as was seen on that most recent holiday.

An additional accept of this rise in gold was due to the Indian government’s unexplained demonetization policy that suddenly declared 1,000 and 500 rupee notes no longer valid. This not only drove up the price of gold in Indian terms but also the surging price of Bitcoin.

A fascinating drive in gold prices in India was the large portion of purchases but the small quantity of purchase prices.

China’s role in driving up gold prices

As Asia regains its appetite for gold, production in the region appears to be dropping. The trend could ultimately have an impact on global markets. According to a rare report issued by the China Gold Association, the country’s first quarter gold production dropped  9.3% year-on-year, falling from 111.563 tons in Q1 2016 to 101.197 tons this year. Meanwhile, demand for gold in China surged 14.73%.

This trend will certainly lead to an increase in the price of gold worldwide if not only against the US dollar.