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Gold Breakout - Real Or False?

Commentaries & Views

Gold made a monster move on Friday, breaking out by pushing toward the $1,300 level. This morning gold is higher once again, trading $1,300 at 6:30 a.m. EST. Is this breakout real or false?

More than likely, this will be a false breakout as gold closed Friday a little overbought at the top end of the pattern on heavy volume. We expect one of two things to happen here -- gold will continue higher and confirm the breakout or it will fall back into the consolidation pattern it has been in for weeks.

The healthiest move would be a small failure, with gold hovering around $1,300, building momentum to make the next big push to $1,340. We are watching $1,290 as a new level of support and are still buyers looking for another push to the upside.

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