Gold rally fueled by activity of undisclosed powerful buyers — Metals Daily

The rally in gold is now going on despite the absence of traditional price drivers, says Ross Norman, Metals Daily's CEO. In his recent article the expert pointed out the anomaly of the observed dynamics. According to his estimates, the traditional correlations and indicators of gold market are not enough to explain its recent growth.

Norman considers the actions of a major undisclosed player to be the most convincing explanation. As the expert noted, the recent large purchases of gold have been extremely opaque and concentrated, and the lack of obvious identifying marks suggests that they have been directed by a single entity.

There are only a few buyers suitable for this role. Norman suggests that the derivatives market is probably one of the sources of demand for the metal. The risk hedging strategy of banks providing options can create a locked loop of increasing activity. Another potential source of demand is large-scale but unannounced central bank purchases.

Looking ahead, Norman notes the increasing likelihood of a consolidation in the gold market. Nevertheless, he believes that the activity of an unknown price-insensitive buyer will cause the precious metal prices to continue its rise in the future.