Gold has declined more than $10 after hitting high of $1324.50 on account of strong US dollar.The yellow metal is trading higher for past 3- week and jumped more than $40 on declining US 10 yield and yield curve inversion. US 10 yer yield hits low of 2.37% lowest since Dec 2017.US 3 month and 10 year yield has inverted for first time since 2007. It hits low of $1312 and is currently trading around $1315.61. 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: Bullish. DXY is trading higher for 4th consecutive day and jumped more than 100 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 recovered more than 70 pips from low of 109.91. Minor trend is slightly positive and a jump till 110.96 (300- day EMA).Any bullish continuation only above 110.96. Positive for gold.
US 10 year yield : US 10 year yield jumped more than 3% after a heavy sell-off .The yield has been trading weak for past two months and lost nearly 25% from high of 3.25%.It is currently trading around 2.42%. positive for Gold.
US 2 year yield: It is trading around 2.24%. The spread between US 10 year and 2 year has declined to 18bpbs 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 violation below will drag the commodity down till $1303/$1298/$1292/$1285.
It is good to buy on dips around $1312-13 with SL around $1307 for the TP of $1323/$1330.
