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Gold – Cause for optimism?

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Gold bulls have reason to feel optimistic

Gold is trading in the green for a second day on Thursday, buoyed by some softness in the dollar.

Gold bulls are also likely boosted by price action on Wednesday when the yellow metal made gains even as the greenback surged to a near two-year high. This is encouraged as the relationship between the two is usually negative but a stronger dollar failed to hold it back.

Gold Daily Chart

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What’s more, the recent break below $1,280 failed to generate downward momentum and each time a new low has been made it’s quickly been bought into. That is hardly encouraging for those that hoped the breakout would bring about another wave of selling, especially against the backdrop of a stronger dollar. Hope is not entirely lost for bears though.

Gold remains below $1,280 currently despite numerous tests which should be encouraging. What all this means is that $1,260 may in fact be a far more significant support level for the yellow metal, should it be tested.

 

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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.

His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.

Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
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