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Gold Fighting Back Against USD Strength

Commentaries & Views

Yesterday’s close: Settled at 1232.4, up 1.3

Fundamentals: Gold remains firm but U.S Dollar strength is certainly holding the metal back from further strength. The Euro is below the 1.14 level and the December contract is making a new low. However, it is important to understand that there was a wide spread when rolling from the September to December contracts so the September low on August 15th for the Euro was 1.13275 and that for the Dollar was 96.865. Ultimately, price action would seem to be gravitating to these levels as the Dollar exudes safe-haven qualities. Still, Gold is holding very firm and investors are reaching to the metal along with the Yen and Treasuries amidst market panic. We remain very upbeat Gold as the technicals look very positive; discussed below.

Technicals: Yesterday, Gold notched a settlement back above the 100-day moving average as the technical groundwork is very constructive. Most importantly, the consistent higher lows with a ceiling at major three-star resistance is creating an ascending triangle which we view as a bullish pattern. However, an ascending triangle requires follow through upon a breakout, not marginal higher highs, otherwise it quickly turns into an ascending wedge which we view as bearish pattern.

Bias: Bullish/Neutral

Resistance: 1240.5*, 1244-1250***

Pivot: 1231.4

Support: 1227.6**, 1219.6-1220.7***, 1213.2**, 1204.3-1205.9***

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