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Gold moderately higher

Gold prices are moderately higher today as stocks rally following the release of the latest FOMC meeting minutes. The minutes revealed that the Fed is concerned about the potential slowing of global growth. In addition, the higher U.S. dollar may weigh on exports. The higher dollar is likely a big reason that the Fed trimmed its GDP forecast. The Fed said that short-term rates are likely to stay low for an extended period of time. The Fed comments fueled a huge rally in stocks while gold rose as well. Of particular note is the potential topping action being seen in the U.S. dollar index. The dollar has likely been a big factor in gold's weakness over the last several weeks, and a turn lower in the greenback could potentially give precious metals investors an excuse to start buying at current levels.
Speaking of stocks, with such a strong rally today one has to wonder if investors have been put at ease and if volatility will begin to shrink. Increasing volatility in recent weeks could potentially be a sign of topping action in the equities markets, however, it is simply too early to determine if a top has in fact been reached. Precious metals investors will likely continue to watch action in stocks closely for signs of any further weakness. Gold will likely remain a seller's market in the meantime until proven otherwise. The gold bulls have their work cut out for them in order to negate the recent technical damage that has been inflicted on the yellow metal. A large rally would not be at all surprising, however, given the recent extreme bearish sentiment surrounding the gold market. A short covering rally could take gold significantly higher before potentially failing again.

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09 Oct 2014 | Categories: Gold

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