Gold surged higher yesterday afternoon following the news that the US Treasury was going to double, at least, the size of its longer-term government debt repurchases. This led to a drop in Treasury yields and a slump in the US dollar.
This triggered a surge in gold as bulls rushed in to buy. This drove the price up through $4,400, a level which has proved to be a significant area of resistance over the past ten days or so, while upside momentum was such that gold broke above $4,500 yesterday evening.
Gold failed to hold above here, however, despite the US dollar continuing its selloff this morning. While this move in gold is impressive, especially given its 10% rally off multi-month lows since the end of last month, it may be a case of too far, too quickly.
Prices may have to back up and fill in now for the precious metal to make further gains. But even if gold were to drop back to $4,400, if it could find support there, that would be a positive sign for the bulls. Even more so should the US dollar continue to decline.
Source: TN Trader
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