Gold Bounces But Bottom May Not Be In
(Kitco News)- Gold bounced nicely off strong support at the $1,302 levelyesterday, with follow-through buying as the Chinese returned from holiday. It's too early to call a bottom, as the dollar remains bid. The key level we are watching is the 1.20 euro/dollar area. Thissupport line has held for months and an overlay of gold prices to theeuro/dollar chart are in sync. Today we have the Federal Reserve announcementon interest rates and it is widely expected that the Fedwill leave rates unchanged at this meeting. The important focus will be on theFed's language about inflation concerns. A heightened worry on this front willreinforce the narrative of a more aggressive Fed and a continuing highertrajectory for the dollar. We don't see gold breaking down before the announcement.Technically, the $1,307 and then again the$1,302 area provide support. A break above $1,312 suggests a move withpotential to the $1,322 level.
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