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Buoyant Dollar rejects gold's rally beyond July low

© Dukascopy Bank SA
"The U.S. dollar has come off its highs which it made recently, that has been the main reason supporting gold."
- Kotak Commodity Services Ltd (based on Bloomberg)

Pair's Outlook
XAU/USD's advance was prolonging up to the weekly R1 at 1,074 on Tuesday. However, the bearish pressure was rising over time, even despite fairly pessimistic US manufacturing data. Main focus, which is shifting back to the Fed, did not prevent the bullion's cooldown by the end of trading. Therefore, our outlook is unchanged with the "negative" status. Initially, the metal is required to reclaim the 1,063 mark, which is safeguarded by the weekly pivot point. Meanwhile, trading volume spiked to the highest level since Nov 20, meaning volatility is on the rise.

Traders' Sentiment
By Wednesday morning, 74% of SWFX traders are holding long positions, showing a recovery of circa four p.p. since yesterday. At the same time, this distribution reveals that gold is too overbought and long term risks are skewed to the downside.  

© Dukascopy Bank SA

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