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Gold & Silver Bounce, Still Remain in Bear Mode

September 9, 2014 at 1:33 by Vladimir Vyun

Gold and silver rose at the Asian session today but this does not necessarily mean that bulls should rejoice. Both metals fell as much as 1 percent at the previous session, proving that they are still in a bear mode.

For now, the major reason for the weakness of precious metals is the strength of the dollar. While the US currency fell a little on Friday due to worse-than-expected nonfarm payrolls, the greenback resumed its rally at the start of this week. It is bad news for gold and silver, which are usually inversely correlated to the dollar.

The precious metals market may yet gain some support from physical demand from Asia, particularly India where traditional season for festivals and wedding approaches, and lower prices may encourage the Indians to buy more gold. Yet for now, it is too early to bet on this factor, especially as stronger dollar led to depreciation of the Indian rupee on the currency market.

December futures for gold ticked up 0.23 percent to $1,257.20 per troy ounce as of 01:30 GMT on COMEX today. Contract for silver advanced 0.50 percent to $19.06 per ounce.

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