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Gold is trading at $1246, up 0.2% on the day as a weak ADP report indicated Friday’s non-farm payroll will not be overly bullish. If this is the case, the Federal Reserve may take a breather from trimmings its stimulus package. Given that gold has dropped over $50 this week, a $2 move to the upside isn’t a major move.
We are less than 24 hours away from the European Central Bank meeting, and the expectation that Mario Draghi will loosen monetary policy has played a big role in gold’s collapse this week. If the easing goes ahead we could see gold drop below $1240, and the next support level down is $1220.
If the ECB does not engage in a stimulus package we could see a retracement. As Alastair McCaig stated, we might see a short-term bounce which could send gold back to $1280.