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Gold is trading at $1285, down 0.3% on the day, meaning the precious metal has been trading below the 200-DMA of $1297 for the past five trading days which is cause for concern.
Gold enjoyed a good start to the year in 2013; the yellow metal registered its first annual loss in over a decade which triggered bargain hunters and the emerging market currency crisis, followed by the possibility of a war in Ukraine, which all set gold on track towards $1400. When tensions began to cool in Russia and the west traders no longer sought the safety of gold, it turned into a flight from quality.
As Alastair McCaig stated gold is unable to generate an income, and, now that the Federal Reserve is already suggesting that it could increase rates in 2015, traders are no longer using the metal as a hedge against inflation.
Tomorrow the US will announce the non-farm payrolls report, where the consensus is for 200,000 jobs to be added. If the report comes in above that we could see gold head towards the recent low of $1280, while the 200-DMA of $1297 is acting as resistance.