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FxWirePro: Gold jumps sharply on dovish Fed, jump till $1350 likely

Gold has shown a good jump of more than $10 and trading near 8-month high at $1323.50. The Fed has kept its interest rates unchanged and said that it would be patient in hiking rates further on account of global uncertainty. It is currently trading around $1303.75.

The major three factors that drive gold prices

 US dollar Index: Weak. DXY continues to trade weak after US Fed policy and lost more than 50 pips yesterday. Any break below 94.98 (300- day EMA) confirms bearish continuation and a dip till 93.80 is possible.(positive for gold).

USD/JPY: Weak. USD/JPY is trading weak and lost nearly 100 pips from yesterday’s high. The pair’s near term support is around 108.50 and any violation below targets 108/107.50.It is currently trading around 108.72.Slightly positive for gold.

 US 10 year yield : US 10 year yield declined more than 2.5%r after dovish Fed.It hits low of 2.67%.The yield jumped more than 10% after forming a minor bottom around 2.54%.The yield has been trading weak for past two months and lost nearly 22% from high of 3.25%.It is currently trading around 2.680%.Positive for Gold.

 US 2 year yield: It is trading around 2.516%. The spread between US 10 year and 2 year has declined to 17bpbs 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

Gold continues to trade higher and jumped more than $10.On the higher side, yellow metal is facing resistance around $1325 and break above will take the gold to next level till $1350$1360.

The near term support is around $1307 and any violation below will drag the commodity down till $1300/$1295.Any break below $1276 confirms minor weakness.

It is good to buy on dips around $1307-08 with SL around $1300 for the TP of $1325/$1350.

 

 

 

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