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Peter Bukov
Gold Safe Haven

Last week, gold soared, and it was trading notably higher on Monday as well, with the precious metal rising 1 percent to trade at fresh three-month highs above 1,230 USD per ounce. It also briefly jumped above the strong resistance of the 100-day moving average, which currently stands at around 1,227 USD.

As stock markets plummeted all around the globe, sentiment deteriorated sharply, and investors turned back to the well-known safe-haven – gold. Equity markets suffered the worst drop since February but remain above 200-day moving averages (for US stock market indices), which means the long-term bullish trend could remain intact. Nevertheless, gold surged and continued to strengthen this week as well.

The bullion remains heavily oversold and net short positions were sitting at multi-year highs before the mentioned rally. Some of them were closed during last week and, since gold is pushing higher, more of these short positions will also probably unwind this week. Should this trend continue, more and more short positions could be exited, meaning that the price could aggressively move higher.

In addition, the US Dollar has been losing steam over the last couple of days, as some of the macro data disappointed, with the Dollar index failing to remain above the key resistance of 95.50. The falling greenback also helped the precious metal to rise.

The bullion managed to break above from the triangle pattern and as long as the price remains above the 1,210-1,215 USD zone, the short-term outlook seems bullish. Another support could be at the mentioned 100-day moving average.

On the upside, the resistance could be seen at around 1,240 USD and if conquered, further rise toward 1,260 USD might occur.

This article was written by Peter Bukov, one of TeleTrade’s leading analysts. 

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