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FxWirePro: Gold trades lower on strong US dollar index and weak yen, forms bearish divergence in daily chart,good to sell on rallies

  • Gold is trading weak in this week after a slight jump till $1266.80. The main reason for fall is strong US dollar index and weak yen. The yellow metal has formed a temporary bottom around $1237 on Jul 3rd 2018. US CPI data shows that Consumer price index rose to 0.1% compared to forecast of 0.2%. But CPI y-o-y has jumped up 2.9% highest level since 2012. The slight increase in inflation will support higher interest rates.The yellow metal has lost its safe demand appeal.
     
  • The major three factors to be watched for gold price movement are
  1. US Dollar index – Strong  (negative for gold)
     
  2. USDJPY- Bullish   (negative for gold)
     
  3. US 10 –year yield – 2.85% (0.11% for the day (neutral for gold)
  • The pair is facing strong trend support at $1239 (trend line joining $1046 and $1122) and any break below will take the yellow metal till $1234 (200- W MA) and any weekly close confirms further weakness.
     
  • The near term resistance is around $1252 (10- day MA) and any convincing break above will take the yellow metal till $1258/$1262 (20- day MA)/$1266.
  • It is good to sell on rallies around $1250-52 with SL around $1260 for the TP of $1234.

 

 

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