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Gold correlation with US dollar looks finished
Published on 09.02.2018 17:33

The gold price has found strong resistance today at the $1,320 mark as it did in yesterday’s trading session and has pulled back and now looks to be heading down towards yesterday’s resistance point of $1,308.

The Dow Jones index tumbled again yesterday by over 1000 points which should have been a boost for gold but this failed to eventuate and instead investors once again chose the US dollar as a safe haven over gold which on the surface looks like a big warning sign.

If we look at past stock market corrections, gold has benefited immensely as a safe haven so something is definitely different this time around and if the stock market suddenly stabilizes there is bound to be even less interest in gold and the potential for further losses is a real possibility.

Should the resistance point of $1,308 be broken over the next few trading sessions there is little support remaining and we may see investors leave the precious metal in droves.

The material published in on this page is produced by the FIBO group companies, and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC; furthermore it has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

Andrew Masters

Analyst

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