Gold is trading higher for 5th consecutive day and jumped nearly $25 in past two trading session.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 lost more than 60 pips yesterday. The index’s major support is around 96.34 and any break above targets 96/95.54 (positive for gold).
USD/JPY: strong. USD/JPY has shown a minor recovery after forming a bottom around 110.25.It is currently trading around 110.85. The near term resistance is around 111.40 and any break above targets 112.Slightly negative for gold.
US 10 year yield : US 10 year yield has declined more than 1.5% yesterday and hits low of 2.629%.The yield has been trading weak for past two months and lost nearly 22% from high of 3.25%.It is currently trading around 2.645%.slightly positive for Gold.
US 2 year yield: It is trading around 2.496%. The spread between US 10 year and 2 year has declined to 15bpbs 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 $1350 and break above will take the gold to next level till $1360/$1365.The yellow metal should break above $1365 for further bullishness.
The near term support is around $1340 and any violation below will drag the commodity down till $1330 (23.6% fib)/$1324 (5- day MA).Any break below $1300 confirms minor weakness.
It is good to buy on dips around $1335-36 with SL around $1330 for the TP of $1350.


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