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Rate hike anticipation drives sideways grind

Commentaries & Views

There is still no close under $1,900 gold despite a dip down to $1,885 overnight. In fact, the quick reversal back over $1,900 supports the case for a bullish trade to $1,925, so long as the level is maintained on a closing basis. Short-term momentum in the metals complex is becoming very oversold. It will be interesting to see whether the PMs will benefit from a relief rally next week upon execution of the much anticipated FED rate hike.

Platinum, in particular, has been flirting with extremely oversold conditions, finding support at the $915 level and may be ripe for a $50 move up back to $965. Traders might enter long platinum and place stops just below today's low of day, for example.

Major US indices continue to hold above the winter lows, for now. With such bearish sentiment and numerous bearish catalysts priced into stocks, contrarian bulls would continue to bet on a relief rally upon actual execution of the rate hike next week. However, as seasoned traders would know, the risk of "whiplash" in this choppy market is real; Emotionally driven trading (aka capitulation) is at risk of manifesting.

Thanks and have a great day,

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