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Gold Rally Fails as Fundamentals Remain Mixed Blessing

December 16, 2011 at 4:22 by Vladimir Vyun

Gold attempted to rally yesterday, but failed. The Federal Reserve refrained from adding stimulus during its monetary policy meeting on December 13. The decision was bad for gold as the QE3 would result in a weaker dollar that could boost the precious metal. Much of the previous strength of gold was derived from the continuous attempts of the developed nations to weaken their currencies.

The dollar was still weaker yesterday as the fundamental reports from the United States were good for the most part and gold attempted to profit from that. Alas, without much success. The good fundamentals are a mixed blessing for the yellow metal. Good macroeconomic data results in less demand for a safe haven, leading to a weaker dollar, but also less need for gold as a refuge.

Gold opened at $1,571.50 per ounce, rallied to $1,592.80 and closed at $1,573.40 on COMEX.

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