How can I make this gif have smooth edges? In the psd it looks smooth until I save it as a gif. I'm using photoshop CS2. I have included a link to the psd and attached the gif to see the difference

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Don’t save it as GIF, save it as 24 bit PNG (optionally with alpha transparency = 32 bit). I suppose GIF is stripping out many colors because it can only handle 256 colors at a time.

Ok, cheers for that :)