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Gold breaks down

Lower inflation and a strengthening US dollar spell trouble for gold. Although trade fears remain a threat to global growth it appears there is not enough concern to spark safe haven buying. A number of negative factors and few positives mean the price of gold continues to slide.

The chart reflects these dynamics. Over the last few sessions the plunge has breached important support, and a fall through US $1,195 could see traders targetting support as low as $1,125. The RSI at the bottom of the chart is offering hope to gold bugs. In a classic bullish divergenge the RSI made a higher low, in contrast to the gold price's lower low. Although the RSI is rarely used as a stand alone indicator the proximity to multiple support levels could mean a corrective rally is on the cards.

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