The following content is from economic analyst Jesse Colombo.

A few weeks ago, I published an article discussing the potential for another wave of gold rally driven by China, which could quickly push the price of gold to $3000. My argument is based on the observation that China'sFutures Trading Commission (CFTC)'s latest data shows that investors are significantly reducing their net short positions in US soybean, corn, and wheat contracts, easing bearish sentiment in the market.participants were behind the explosive $400 surge in gold this spring. However, these traders have been dormant for the past five months due to the stagnation of the renminbi gold price.

I propose that a technical breakout in the renminbi gold price could trigger a strong rebound similar to the spring. Since suggesting this point, I have been monitoring the breakthrough in the renminbi gold price, and that moment seems to have arrived.

Let's first take a look at the trend chart of gold futures on the Shanghai Futures Exchange, which was the main driving force behind the gold frenzy in March and April. Since reaching its peak in April, the price has been oscillating within a clear trading range. However, with Chinese traders returning from the Mid-Autumn Festival, the contract has recently experienced a technical breakout. Although the breakout is not significant yet and the trading volume is not high, it still has great potential for upward momentum, especially after a period of sluggishness earlier this month, with trading volume continuing to rise.

The international spot gold price priced in yuan (different from the mainland China gold price) has been trading within a clear range since April. Its recent breakout further enhances the credibility of the Shanghai Futures Exchange gold futures breakout.

The price of gold priced in US dollars is also showing a strong upward trend, breaking through two key resistance levels in the past month and a half:

The Financial Times of the United Kingdom published an article in April titled "Chinese speculators drive gold surge", providing a convincing explanation for the spring surge in gold prices this year. The article emphasizes how the trading volume of Shanghai gold futures has surged by 400%, driving gold prices to repeated new highs:

More evidence of the earlier frenzy in Chinese gold trading can be seen from the Shanghai gold futures open interest chart this year:

As John Reade, Chief Market Strategist of the World Gold Council, said in the Financial Times: "Chinese speculators have truly grasped the throat of gold. For decades, emerging markets have been the largest end consumers, but due to the rapid capital from the West, they have been unable to exercise pricing power. Now, we are entering a phase where speculative funds in emerging markets can exert pricing power."

Currently, Shanghai Gold Futures has broken through the trading range and is likely to followTechnical Analysiswhat the analyst called a "rhythmic trend", which means that the rebound after a consolidation pattern is expected to be the same number of points as the rebound before the consolidation pattern. Based on this principle, gold is likely to reach around $3000 in the months following the breakout! If this sounds absurd to you, it is actually just a 12.8% increase from the current price.

In summary, all signs indicate that China is likely to ignite a gold frenzy similar to earlier this year. Shanghai Futures Exchange's gold futures breaking through the trading range, along with the rise in gold prices calculated in most major currencies, indicate that speculative fervor is about to return.

Driven by renewed interest from Chinese traders, gold is highly likely to experience rhythmic fluctuations, quickly breaking through the $3000 mark.

With the changing market dynamics, the impact of emerging market speculators on the global gold price is becoming increasingly evident, creating conditions for a significant surge in the coming months.