After this morning’s break of support near $1275 gold was at risk of suffering a much deeper tumble. However, something unusual occurred shortly after the US equity market open:

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A $30 upside reversal which places this morning’s brief break of support in the false breakdown category. And as we know, from false moves often come fast moves in the opposite direction…..

With sentiment heavily skewed to the bearish side, a push above resistance near $1305 could set in motion another powerful short covering rally similar to the one we saw in February.