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17:25 ACM Precious Metals Analysis Gold Active in Today's Session
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Gold start a slow recovery following the ECB’s rate cut of 50bps to 2.00%. In addition, more negative data out of the US provided some short-term momentum, which fizzled out early in the session. Dollar strength continues to be a key factor in the trend of gold prices. The bull trend that seemed to be building last week, has fallen victim to the risk aversion trade. Equities are negative, commodities are lower, and the dollar is stronger. Oil is off 10% at $33bbl, despite threats by suppliers to cut production. The heightened level of volatility is an indication of fear in the marketplace. The VIX traded as high as $55 today but eased as the day progressed. A key tool in timing a break in the risk aversion trade will be a stabilization in the VIX below $40. Our strategy for gold is play capture short-term gains with limited downside. Don’t against the risk aversion trade, instead structure a hedge through a long dollar position, just in case gold slips below $800oz.
Support: 794.90 Current: 818.15 Resistance: 833.18
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