On Monday, gold reversed smartlyfrom the lows of the day to close higher. The rally brings about the question-- was the move on Monday a dead-cat bounce or has the rally begun? Based onthe trade and where gold is now, a case can be made for either.
If you are in the dead-cat-bouncegroup, the bounce from oversold conditions makes sense, with gold being underselling pressure for weeks. A relief rally would be no surprise and new moneycan come in and continue to sell the metal, assuming the downtrend wouldcontinue
However, if you are in the bullcamp, gold came right down to our $1,280 level and this should be the bottomfor the move. Gold has been bullied by the strong dollar, interest rates andrallying equities but appears to have put in a bottom. The $1,280 level shouldhold and the rally should be on, with only a small chance to see $1,260.
By Todd 'Bubba' HorwitzContributing tokitco.com
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