Gold prices surged 20% in two weeks, reaching $5,536 per ounce. Such a rapid increase has only occurred a few times in the past fifty years, and each time, the market reached a crossroads.
According to a report from the trading desk, on January 29, Deutsche Bank analyst Michael Hsueh pointed out that a 20% increase in gold over two weeks is a historical dividing line, distinguishing whether gold prices will continue to surge or consolidate.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/322c2d0d-cc6d-41f2-91c0-4848ff1ea5df.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/322c2d0d-cc6d-41f2-91c0-4848ff1ea5df.png"/> (The two-week increase in gold reached 20%)
When the two-week increase in gold surpasses the 20% threshold, the probability of gold prices continuing to rise in the next six months drops sharply to 38%. The average increase is only 11%. Meanwhile, the probability of a decline rises to 62%, with an average decline of 1%.
Data from half a century shows that similar rapid increases were mostly concentrated in the 1970s and 1980s, a time of rampant inflation where gold price fluctuations were closely tied to inflation cycles. However, today's situation is different. Hsueh wrote in the report:
<blockquote>
Current inflation is not the core issue, and the motivations for investors to buy gold are more complex. Historical scripts may not necessarily repeat.
</blockquote>
<h2>The Faster the Increase, the Worse the Subsequent Performance</h2>
Deutsche Bank believes that as the two-week increase in gold accelerates, the probability of further price increases shows a downward trend.
Performance in the 10-15% Increase Range: When the two-week increase in gold is in the 10-15% range, the probability of higher prices six months later is 63%, with an average increase of 21%; the probability of higher prices twelve months later is 67%, with an average increase of 31%. This range shows a relatively healthy subsequent trend.
Performance in the 15-20% Increase Range: When the increase expands to the 15-20% range, the probability of higher prices six months later drops to 60%, with an average increase of 16%; the probability twelve months later drops to 50%, with an average increase of 35%. The probability of further increases has clearly declined.
Performance in the 20-25% Increase Range: Once it breaks through the 20% increase and enters the 20-25% range, the situation takes a sharp turn.
The probability of higher prices six months later plummets to 38%, with an average increase of only 11%; the probability twelve months later falls to 33%, with an average increase of only 2%. This means that at the current price level, the probability of gold declining in the next 6-12 months exceeds 60%.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/57df77a1-b776-42f6-9f2d-17d5e7b479e3.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/57df77a1-b776-42f6-9f2d-17d5e7b479e3.png"/>
It is worth noting that in the case of a decline, the average decline in the 10-15% increase range over six months is 3%, and the average decline over twelve months reaches 21%; while in the 20-25% increase range, the average decline over six months is 1%, and the average decline over twelve months is 14%.
Rapid surges often indicate excessive consumption of momentum. Historically, the larger the increase, the lower the probability of subsequent rises.
Deutsche Bank's report maintains its average gold price forecast at $6,000 for the fourth quarter of 2026. For investors holding long positions in gold, now may be a time to consider taking moderate profits. For those on the sidelines, waiting for a price correction before entering may be a wiser strategy

Deutsche Bank analyst Michael Hsueh pointed out that when the gold price rises more than 20% over two weeks, the probability of continued price increases in the next six months drops sharply to 38%. The average increase is only 11%. Meanwhile, the probability of a decline reaches 62%, with an average drop of 1%. Deutsche Bank's average gold price forecast for the fourth quarter of 2026 remains at $6,000

- Gold prices surged 20% in two weeks, reaching $5,536 per ounce, a rare occurrence in the past five decades with historical implications for market direction.  
- Deutsche Bank analyst Michael Hsueh noted that once gold's rise exceeds 20%, the probability of further increases drops to 38%, while the likelihood of declines rises to 62%.  
- The bank forecasts an average gold price of $6,000 by Q4 2026, suggesting that current holders may consider taking profits, whereas potential investors might wait for a price correction.

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