Gold has recovered slightly despite strength in dollar shows that demand for safe haven assets increasing. The yellow metal jumped more $50 in month of Jan on account of dovish Fed and global uncertainty.
The major three factors that drive gold prices
US dollar Index: bullish. DXY has once again declined after hitting high of 96.67. It is almost like double top and index is trading slightly above 50- day MA around 96.37. Any weekly close above 50- day MA confirms further bullishness.Any break above 96.68 (61.8% fib) confirms minor bullishness and a jump till 97.75 is likely. .(negative for gold).
USD/JPY: Strong USD/JPY is showing a minor weakness once again after showing a slight jump above 110. The pair’s near term resistance is around 110 and any convincing break above targets 111/112.It is currently trading around 109.68.Slightly negative for gold.
US 10 year yield : US 10 year yield is trading weak for 3rd consecutive day and hit low of 2.63%.The yield has been trading weak for past two months and lost nearly 22% from high of 3.25%.It is currently trading around 2.70%.slightly positive for Gold.
US 2 year yield: It is trading around 2.47%. The spread between US 10 year and 2 year has declined to 16bpbs 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, yellow metal is facing near term resistance around $1315 and break above will take the gold to next level till $1321/$1330..The yellow metal should break above $1335 for further bullishness.
The near term support is around $1305 and any violation below will drag the commodity down till $1298 (20- day MA)/$1295.Any break below $1276 confirms minor weakness.
It is good to buy on dips around $1303-04 with SL around $1298 for the TP of $1334.
