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Gold Hovers Around $1,280

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Gold is acting as we would like as it hovers around the $1,280 level. Although the yellow metal traded as low as $1,273 on Wednesday, that is certainly within the margins of error; levels are not exact. One percent plus or minus support or resistance is basically the same.

There are reasons to believe that gold has made the bottoms, although we are not committing new money yet. The fact that Venezuela has puked out much of its gold certainly helps in making a bottom. Events like Venezuela are always signs that a market is getting ready to reverse the current pattern.

What do we do now? The answer is simple -- you observe patiently, waiting to see if the bottoms have been made. As we wrote that last few days, the best action from here would be consolidation that will help build a base. We would like to see gold consolidate for a week or two, which could turn us into buyers, but for now we watch.

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