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Dead-Cat Bounce Or Start Of Rally?

Commentaries & Views

Federal Reserve policymakers Wednesday pulled off an illusion that has Harry Houdini rolling over in his grave. They managed to pretend to raise rates while keeping massive pressure on the dollar. The move was a zero-sum game for global interest rates, meaning that if you are a foreign borrower, because of the weakness in the dollar, your interest rates stayed the same.

Gold loved the news and rallied over $20 on Wednesday. Silver and copper joined the party as well, loving the weaker dollar. The real question is -- was that rally a dead-cat bounce from oversold conditions? Is this the start of the next leg up?

Nothing on Wednesday changed the patterns that the metals are in. Gold is still in the same range and until it breaks out over $1,365, the trend is lower. With Wednesday’s big rally, gold managed to make another lower high, which is not bullish. We will continue to observe the metals and sell at resistance until the top end of the range is violated

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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