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Commodities Brief: Gold seeking last week's high at 1,424.00

FXstreet.com (Barcelona) - Gold is enjoying some steady bids away from an initial 3-hour cluster of activity around 1404/1408, currently seeking recent 'corrective' highs at 1424.00 after a $10+ upside acceleration.

The massive paper selling from last week has seen an unprecedented physical buying, kick-started in the Indian gold market but soon spreading to other areas such as China, Dubai, Japan, the U.S.

According to Tim Iacono, the founder of the investment website 'Iacono Research': "Premiums have soared with coin shortages now widespread, and those silver coin dealers currently offering metal for sale (with a promised delivery of 4 to 8 weeks) now charge an average of about $5 an ounce above spot..." adding that "it brings to light how poorly futures market trading reflects the physical market supply/demand fundamentals..."

Technically, the current paper surge comes as the metal market seems to have finally stabilized in the last few days, with the ongoing corrective moves producing a constructive structure of higher highs and higher lows, well observed from an hourly chart.

Add the elimination of imminent supply area, following last week's violation of 1400/1420, and it appears to be more room to run to the upside before facing 1448/50 area - where unfilled sell orders should kick in -. It is likely that a growing number of courageous short term counter traders may continue to see dips as opportunities to load up on paper gold.

The promising bull picture may be put in jeopardy should 1390 swing low be taken out, with the break of a sequence of lows through 1383/85 from last April 18/19 further confirming that the bears are back holding the upper hand.

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