Gold is well placed for further strength

Gold continued its bull run yesterday, topping out at another record: $1,225. Renewed safe-haven gold demand was spurred by Fitch saying that the UK’s fiscal problems were “formidable” and that the UK’s sovereign credit rating was in danger if budget-deficits cuts were not swift and decisive. This fueled concerns about Europe’s debt crisis and contagion effects, as well as the risks to Eurozone economic growth. In overnight trade, there was a slight pullback, although we ascribe this to profittaking, and remain we confident that gold is well placed for further strength. I think it was best to continue to advocate buying into dips.

Gold support is at $1,229 and $1,222, resistance at $1,247 and $1,260.

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