FxWirePro: Gold trades lower on strong stock market, good to buy on dips

Gold has lost more than $15 on strong global stock market. The slight decline in US dollar is supporting ex is supporting yellow metal.It hits high of $1311.50 and is currently trading around $1303.80. Gold was one the best performer in Jan and has jumped more than $50 on account of dovish Fed and global uncertainty.

The major three factors that drive gold prices

US dollar Index: Bearish. DXY has shown a minor decline after a jump of nearly 40 pips from low of 96.39.It is facing strong resistance 97.71 and any break above confirms further bullishness and a jump till 98/98.60 likely (positive for gold).

USD/JPY: strong. USD/JPY has recovered nearly 90 pips from low of 111 made yesterday.It is currently trading around 111.68. The near term resistance is around 112.20 and any break above targets 112.60/113. negative for gold.

 US 10 year yield : US 10 year yield is trading slightly lower after showing a 1% jump.The yield was trading weak for past 1 week and lost more than 6.5%.The near term support is around 2.59%.The yield has been trading weak for past two months and lost nearly 22% from high of 3.25%.It is currently trading around 2.629%. positive for Gold.

 US 2 year yield: It is trading around 2.475%. 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 $1311.55 and break above will take the gold to next level till $1316/$1322.The yellow metal should break above $1346 for further bullishness.

The near term support is around $1292 and any violation below will drag the commodity down till $1280/$1271/$1265.

It is good to buy on dips around $1295-96 with SL around $1290  for the TP of $1322.