Reviewing half a century of data: What usually happens next when gold's short-term increase exceeds 20%?

``` Gold prices have surged 20% in two weeks, reaching $5,536 per ounce. Such a rapid rise has occurred only a few times in the past fifty years, and each time the market faced a fork in the road. According to Zhui Feng Trading Desk, on January 29, Deutsche Bank analyst Michael Hsueh pointed out that a 20% two-week rise in gold is a historical dividing line, which differentiates whether gold prices will continue to surge or take a break. (The two-week gain in gold has reached 20%) When the two-week gain in gold surpasses the 20% threshold, the probability of further gold price increases in the next six months plummets to 38%. The average gain is only 11%. Conversely, the probability of a decline reaches 62%, with an average drop of 1%. Data from half a century show that such rapid surges mostly concentrated in the 1970s and 1980s, an era of rampant inflation where gold price volatility was closely tied to inflation cycles. But today’s situation is different. Hsueh wrote in his report: Current inflation is not the core issue, and the motivations for investors to buy gold are more complex. History may not necessarily repeat itself. The faster the rise, the worse its follow-up performance Deutsche Bank believes that as the pace of gold’s two-week surge accelerates, the probability of further price increases shows a downward trend. 10-15% increase range: When the two-week gain in gold is within 10-15%, the probability of higher prices six months later is 63%, with an average gain of 21%; twelve months later, the probability is 67%, with an average rise of 31%. This range demonstrates relatively healthy subsequent performance. 15-20% increase range: When the gain expands to 15-20%, the probability of higher prices in six months drops to 60%, with an average rise of 16%; twelve months later, the probability drops to 50%, with an average gain of 35%. The probability of subsequent increases has clearly declined. 20-25% increase range: Once the gain surpasses 20% and enters the 20-25% zone, the situation changes sharply. Six months later, the probability of higher prices plunges to 38%, with an average gain of only 11%; twelve months later, the probability drops even further to 33%, with an average gain of just 2%. This means that at the current price level, gold is more than 60% likely to decline in the next 6-12 months. It’s worth noting that in cases of decline, the six-month average drop for the 10-15% surge range is 3%, while the twelve-month average drop is 21%; for the 20-25% increase range, the six-month average drop is 1%, and the twelve-month average drop is 14%. A rapid surge itself often indicates excessive momentum consumption. Historically, the greater the gain, the lower the probability of sustained increases. Deutsche Bank’s report still maintains its forecast for average gold prices at $6,000 in the fourth quarter of 2026. For investors holding long gold positions, now may be a time to consider realizing some profits. For those on the sidelines, waiting for a pullback to enter may be wiser. ~~~~~~~~~~~~~~~~~~~~~~~~ The above excellent content comes from Zhui Feng Trading Desk. For more detailed analysis, including real-time interpretation and frontline research, please join [Zhui Feng Trading Desk · Annual Member]. Risk Warning and Disclaimer The market involves risk, and investment requires caution. This article does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, viewpoints, or conclusions in this article fit their specific situation. Investing accordingly is at your own risk. ```