Gold Price Hits USD1,340 - Any pullback will be buying opportunity

A look at short-term correlations shows that much of the latest rally in precious metals was driven by dollar weakness. At the same time, metals have seen speculative length and open interest rise across the board in recent weeks. In the physical market, scrap gold is coming to the market. We would not be surprised to see a pull-back in gold towards $1,300.

With the Bank of Japan cutting its overnight lending rate to a range of 0%-1% this morning (which spurred a flurry of buying in precious metals in Tokyo) and our expectation for more quantitative easing from the Fed in November, we would see any pullback as a buying opportunity.

Gold support is at $1,311 and $1,300, while resistance is at $1,330 and $1,335.

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