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Why I Expect Gold Prices to Rebound from Last Week’s 1.9% Drop

This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.

After a massive 8.7% rally since July 7, gold prices were due for some weakness. That weakness finally arrived last week, as prices dropped 1.9% between Friday, Sept. 8, and Friday, Sept. 15.

Now The Balance Begins To Shift

The balance between QE and Treasury supply will begin to shift in July. The underlying bid it has provided for stocks and Treasuries will begin to fade.

This report tells why, and what to look for in the data and the markets.  GO TO THE POST

Fortunately, I had been warning investors that we should expect a pullback…

You see, the rally from Aug. 22 into Friday, Sept. 8, took the price of gold from $1,291 all the way to $1,351. That’s a massive 4.6% gain in just over two weeks.

I said those gains had to be digested. I also pointed out that the U.S. dollar had sold off too far, with the U.S. Dollar Index (DXY) falling to a 32-month low of 91.35 on Sept. 8. Since it had become technically oversold, we were due for some sort of near-term bounce, and now the DXY is back up to 91.88 today (Monday, Sept. 18).

Both the DXY rebound and gold price correction are still running their course. I think we could see more consolidation, or even a bit more weakness, for the gold price in the interim.

But this decline will be brief, as gold prepares to resume its uptrend. Today, I’m going to show you just how much more gold prices will rally through the end of the year.

Before I get into my gold price forecast, let’s look at gold’s performance last week…

Gold Prices Post First Weekly Loss in a Month (Sept. 8-15)

After closing at $1,351 on Friday, Sept. 8, the price of gold started Monday, Sept. 11, with a sell-off. The metal fell to $1,335 by the open as the DXY rose from 91.50 to a peak of 92. However, gold managed to recover those losses and ended the session flat at $1,351.

Tuesday was more of the same behavior, as gold prices endured weakness early in the session before recovering by the close. They opened lower at $1,325 and climbed higher throughout the day, settling back at $1,351 for no gain.

But the gold price took a beating on Wednesday, as the dollar rallied toward 92.50. That caused a sell-off in gold, which started the day lower at $1,333 and closed at $1,328 for a 1.7% loss on the day.

Here’s a look at the DXY’s strength last week…


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Wall Street Examiner Disclosure: Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. No endorsement of such content is either expressed or implied by posting the content. All items published here are matters of information and opinion, and are neither intended as, nor should you construe it as, individual investment advice. Do your own due diligence when considering the offerings of information providers, or considering any investment.

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