Gold prices broke out closing at a 6-year high as the dollar eased slightly and US yields slipped. Hedge fund investors Ray Dalio is seeing a case for gold as central banks get more aggressive with policies that devalue currencies and are about to cause a “paradigm shift” in investing.

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Technical Analysis

Gold prices closed at a fresh 6-year high breaking out from a bull flag continuation pattern. The flag could see prices take another leg higher targeting the 2013 highs at 1,695. Short term support is seen near the 10-day moving average at 1,408. Resistance is seen near the July highs at 1,438. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal. The RSI is also pointing higher reflecting accelerating positive momentum.

Hedge Fund Titan Like Gold

Ray Dalio, founder of the world’s largest hedge fund, wrote in a LinkedIn post that investors have been pushed into stocks and other assets that have equity-like returns. As a result, too many people are holding these types of securities and likely to face diminishing returns. Gold will outperform according to Dalio as investors look toward alternative assets. Dalio said that most investors are underweighted in such assets, meaning that if they just wanted to have a better balanced portfolio to reduce risk, they would have more of this sort of asset.

This article was originally posted on FX Empire

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