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NEW YORK (TheStreet) -- Spot gold prices were moving higher again on Wednesday as demand for physical gold bullion remains robust.

Spot gold was recently quoted at $1427.20 per ounce, up $13.60. As discussed in previous posts, buyers for gold bullion have been coming out of the woodwork to buy at these reduced levels.

It is this demand for physical gold bullion that stopped the market from hemorrhaging further. There are continuing reports of dealer shortages and rising premiums on physical gold products.

The U.S. Mint suspended sales of some gold coins as supplies for physical gold products have been unable to keep up with demand. It would appear that many investors looked at this selloff as a great opportunity to add to long-term holdings at lower price levels.

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Indeed, gold prices have regained the $1,400 level and all indications are that a near term bottom has been put in. Some of the larger players in the market have reduced bearish bets on gold prices. Goldman Sachs has recommended to its clients that short positions in gold be exited.

These reports would appear to indicate that prices may stabilize and move higher from here. So what happens now to all those who chased this market and sold gold at or near the lows? That's right -- they will likely be forced to cover as the pain of the market moving up becomes too much to bear.

Today's price action would seem to suggest that a powerful short-covering rally is already under way. I am of the opinion that we will see gold prices print $1,471 or higher in the coming sessions.

This area represents an approximate 62% retracement from the breakdown level. In addition, this level also happens to coincide with the 20-day exponential moving average and thus could be a likely target for price action.

Gold is also getting help today from two of its biggest influences -- the crude oil market and the U.S. dollar index. Crude oil is trading sharply higher while the greenback is trading a bit softer.

The U.S. dollar has been very strong in recent weeks. However, any signs of weakness could force even more gold shorts out of the market and attract fresh buyers into the market. Dollar weakness along with a sizable short squeeze could propel gold prices not only to an initial target at $1,471, but could conceivably take prices back to the scene of the crime -- the breakdown level at $1,550-ish.

Please visit our Web site for updates on the gold market and useful information for purchasing the physical metal.

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This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Matt Zeman is a trader at Kingsview Financial. He began his trading career as a runner in the grain pits at the Chicago Board of Trade before becoming an arbitrage clerk. Eventually he started trading equity options and stocks. Matt now is a full-time futures broker and also authors a blog for gold investors at Appreciate Gold. He has been a frequent guest on CNBC, Fox and Bloomberg, and provides his views on the stock, bond and futures markets for financial media including Dow Jones, the L.A. Times and The Associated Press. Matt is a member of the Chicago Board of Trade, and carries series 3, 7 and 66 licenses.