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Gold Trends Near Resistance After Consecutive Session Gains

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Gold found support after dollar weakness.

Christopher-LemieuxSMBullion.Directory precious metals analysis 22 December, 2015
By Christopher Lemieux
Senior Analyst at Bullion.Directory; Twitter @Lemieux_26

Currently, gold is budding up against intraday resistance, following two consecutive sessions of gains on a weaker dollar. As the rate hike came and went, many – even those who ushered in the hike with excitement – are beginning to wonder if the Federal Reserve waited far too long to boost interest rates.

The yellow metal had began its two-day rally by finding bidders on the weekly support level of $1,046. Even though gold has seen nice gains following the FOMC, the paradigm has been to sell rallies despite whether or not it fundamentally makes sense. According to the Commitment of Traders data, large speculators are the most short gold ever.

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This could cause for a disastrous 2016 for hedge funds if fundamentals for owning gold improve, as we have already seen what happen when crowded trades unravel in the euro.

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On the four-hour chart, gold is hovering just under $1,080 and the 200-4H EMA, which will act as dynamic resistance until a confirmed breakout occurs. Price action is trading at the upper-end of a symmetrical triangle, while a minor descending support within the pattern is found (dotted line). Within the pattern, support is found at $1,074 and $1,066, while a confirmed breakout could signal a move higher to $1,088 and $1,095, potentially $1,111, per ounce.

If gold prices do see selling pressure and close beneath trend support, weekly support levels will remain key. $1,000 and $955 are technical targets.

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