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Gold Regains Its Legs

Commentaries & Views

(Kitco News) - Gold finds its legs after the crush in global equity markets yesterday. The rising yields with the uncertainty of the trade war with China became too much for equity investors and the herd headed for the exits. The scenario suggests that it was a safe haven play, but generally when equities collapse the first move for gold is lower, as investors raise cash to meet margin calls. This move in gold is more consistent with the view that the markets are warning the Fed about its aggressive policy and a change in sentiment here will adversely affect the dollar. The weakness in the dollar overnight and to some extent the fear in the equity carnage spooked the shorts. We would expect gold to hover around this level as the equity chaos plays out today. From a technical perspective, watch the $1,197 level for support and the $1,207 level for a breakout to the $1,222 next target.

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