FxWirePro: Gold hits 17-month low, good to sell on rallies

Overall trend - bearish

Gold has lost more than $10 from the yesterday’s high of $1198.The main reason for sharp fall in yellow metal was due to huge surge in US dollar index. DXY hits 13 month high around 96.87 at the time of writing.The yellow metal has broken major psychological support at $1200 and closed below that level on daily basis.It is currently trading around $1187.97. 

The major three factors to be watched for gold price movement are

1. US Dollar index – bullish (negative for gold)- DXY has shown a jump of more than 180 pips in previous week. It is currently trading around 96.80.
    
2. USD/JPY-  slightly bullish (negative for gold)- It has recovered slightly after hitting low of 110.11. It is currently trading around 110.86 (0.14% higher).
    
3. US 10 –year yield – 2.89% (shown a jump of more than 1.5% from the low of 2.84%) It is slightly negative for gold.
    
4. US 2 year yield 2.625% (0.62% lower). The spread between 2 year and 10 year yield (2.89%-2.625%) is 27 basis point slightly reduced from 35 basis point.

The pair is facing strong support at $1180 and any break below will take the yellow metal till $1160/$1150.

The near term resistance is around $1200 and any convincing break above will take the yellow metal till $1210 (10- day MA)/$1217 (20- day MA).

It is good to sell on rallies around $1200-02 with SL around $1210 for the TP of $1178.