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Dead-Cat Bounce Or Has Gold Rally Begun?

Commentaries & Views

On Monday, gold reversed smartly from the lows of the day to close higher. The rally brings about the question -- was the move on Monday a dead-cat bounce or has the rally begun? Based on the trade and where gold is now, a case can be made for either.

If you are in the dead-cat-bounce group, the bounce from oversold conditions makes sense, with gold being under selling pressure for weeks. A relief rally would be no surprise and new money can come in and continue to sell the metal, assuming the downtrend would continue

However, if you are in the bull camp, gold came right down to our $1,280 level and this should be the bottom for the move. Gold has been bullied by the strong dollar, interest rates and rallying equities but appears to have put in a bottom. The $1,280 level should hold and the rally should be on, with only a small chance to see $1,260.

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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