Gold was trading lower for past two days and lost more than $15 on account of strength in US dollar.It has made temporary top around $1346 and lost nearly $60. It hits intraday low of $1307 and is currently trading around $1315.61. Gold was one the best performer and jumped more than $120 from Dec 2018 low of $1220 on account of dovish Fed and global uncertainty.
The major three factors that drive gold prices
US dollar Index: Bullish. DXY is trading higher for 5th consecutive day and jumped more than 120 pips from low of 95.74.But overall trend is slightly bullish as long as support 95.75.Any close below targets 95.16/95.(negative for gold).
USD/JPY: weak. USD/JPY declined once again on declining US yield and lost more than 60 pips from yesterday’s high. Minor trend is slightly weak and a decline till 109.50 likely .Any bullish continuation only above 110.96. Positive for gold.
US 10 year yield : US 10 year yield declined sharply once again and hits fresh 14-month low around 2.345%.The yield has been trading weak for past two months and lost nearly 25% from high of 3.25%.It is currently trading around 2.35%. positive for Gold.
US 2 year yield: It is trading around 2.20%. The spread between US 10 year and 2 year has declined to 15bpbs from 30 basis point. The spread between 5 year and 2- year yield has inverted (US 2 year yield trading above US 5 year yield).
Gold technical
On the higher side, near term resistance is around $1323 (61.8% fib) and any convincing break above targets $1330/$1336.The yellow metal should break above $1346 for further bullishness.Any break above will take the gold till $1365.
The near term support is around $1310 (50- day MA) and any convincing below will drag the commodity down till $1303/$1298/$1292/$1285.
It is good to buy on dips around $1305-06 with SL around $1299 for the TP of $1323/$1330.
