Gold hits 6- 1/2 month high at $1298 and continues to trade higher on global stock market turmoil and weak US manufacturing data. Markets eye US non farm payroll data for further direction. It is currently trading around $1295.70
The major three factors that drive gold prices
US dollar Index: neutral. DXY is trading slightly higher after hitting low of 96.17 level.the index should break above 96.54 for further minor bullishness. Any break above 96.54targets 97.12 and its major trend reversal level is around 97.75.(slightly negative for gold).
USD/JPY: Neutral. USDJPY has shown a good recovery of more than 350 pips after a huge sell-off . The pair should break above 110 for further bullishness. It is currently trading around 108.13. Slightly negative for gold.
US 10 year yield : US 10 year yield is trading weak and hits 12-month low after weaker than expected US ISM manufacturing data. The yield has declined sharply in past two months and lost nearly 22% from high of 3.25%.It is currently trading around 2.58%.positive for Gold.
US 2 year yield: It is trading around 2.42%.The spread between US 10 year and 2 year has declined to 16 bpbs from 30 basis point. The spread between 5 year and 2- year yield has inverted (US 5 year yield trading below US2 year yield).
Gold technical
Major support $1183
On the higher side, yellow metal is consolidating after hitting high of $1290 level. Any break above $1290 will take the gold to next level till $1300/$1320.
The near term support is around $1266 (23.6% fib) and any violation below will drag the commodity down till $1252/$1242 /$1234.
It is good to buy on dips around $1245-48 with SL around $1230 for the TP of $1300.


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