Having fallen from $698.00 to $641.10, a fall of 8.87%, gold prices appear to be making a turnaround as they rose over $7 yesterday.

Over the last few months, gold prices have been steadily falling, making lower lows and lower highs. Therefore it was forming a downtrend, at least in the short term, the long term term is still clearly upwards.

However over the last couple of trading sessions, we saw the gold price break the trend by making a higher low and a higher high. Gold prices found support at the 200 day moving average and the technical support level of $640.

Hopefully gold prices can hold onto this trend and begin moving further upwards. We see a serious rise in gold prices coming at the end of the summer as gold prices get well on their way to our target of $1000/ounce.

There has been news from China that Chinese gold production is on the rise, up 11% in the first three months of the year. The head of the gold industry association, Sun Zhaoxue, said that the gold industry in China was entering a period of fast growth built on robust domestic demand.

This increase in production will not have that much of an effect on gold prices as supply is not rising as fast as demand so gold prices will continue to rise. The top economic planner in China has said that China will increase its gold production to 260 tons this year, an increase of 8.3% and although this is a significant event, the excess demand will soak up this increase in supply.

We continue to hold our gold stocks and we will continue to buy on any pullbacks. All of our readers will be kept up to date on our trading ideas in our free newsletter which you can subscribe to below.