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Gold Higher as Stocks Sink

Gold prices rose on Monday to begin the new trading week as stocks sold off. Gold finished up the session several dollars higher on the day but failed to close above the $1200 level.

The dollar index began the session higher but then weakened. Crude oil prices lost more ground today as well, and one has to wonder if another large leg lower might be in store for oil prices. While lower oil may be considered bearish for gold prices, energy company stocks dropping with oil could potentially cause more broad-based selling in the equities markets which could potentially drive safe-haven demand in gold and precious metals.

Friday's non-farm payrolls data was stronger than expected and drove the dollar index higher. There is now more discussion of the Fed tightening rates a little sooner rather than later and perhaps that is adding to some investor angst being seen today. Some weak data out of China is also likely driving some selling in stocks today, and there is the possibility of a larger pullback on the horizon.

On the other hand, today's sell off may simply be another opportunity to buy into the rally. While demand for physical gold has remained relatively steady, the gold bulls have thus far not been able to put together a very strong rally and take prices decidedly beyond the $1200 level. Going into the holidays, the gold market may be caught in a holding pattern until the first of the year when investors may look to move assets around.

The technical picture in gold has improved, but the bulls have a lot to prove. Resistance may be seen at the $1200 level and then again in the $1220 area.

This story is provided by Sharps Pixley, for more information and content please visit: www.SharpsPixley.com

09 Dec 2014 | Categories: Gold

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