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Certainly, the technical’s tell me to be defensive here, and if we hone into a lower timeframe, we can see that when we traded through the range low of $1484 that the bulls lost their dominance. The obvious support level now is seen at $1452/39 (the red shaded area), and it would not surprise me to see price gravitate here, although we watch for a re-test of the range low to confirm $1484 is now resistance.
We turn the page on Q3, and one questions how much of the overnight move has been influenced by month-end flow, certainly in the FX markets. However, with the technical developments in play, let’s examine both sides of the investment case.
"Top pane \u2013 gold vs total value of negative yielding bonds. Lower pane \u2013 the percentage with a negative yield."
There are no doubt signs of better data, and future fiscal measures have seen the case for gold to diminish somewhat, especially when we consider the extremely frothy positioning and moves in the USD. That said, a good flush out should be seen as positive.
We obviously trade price, and on the daily time frame there are few reasons to buy at this point, but the fundamental picture gives me a growing belief that the better risk-to-reward trade-off is to hold off and see if the bulls support into $1450. I suspect they will, but we watch for signs the economic improvement continues, in which case the bond bulls will really question their exposures, which, in turn, will see gold head lower.
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