FxWirePro: Gold skyrockets 6-year high on Middle East tension, good to buy on dips

Gold is trading extremely bullish and jumped another $50 from yesterday's low. The yellow metal has broken psychological resistance around $1400 and hits the highest level since Sep 2013. The jump was mainly due to the dovish Fed and escalation of Middle East tension. The series of incidents such as the attack on tankers in Strait of Hormuz and Iran's downing of a US military drone has escalated further tensions between the US and Iran.

US 10 year bond yield has shown a minor recovery from a low of 1.97%. But the overall trend is still weak and spread between 10 year and 3 month has narrowed from 25 basis point to 13 basis point. It is currently trading around 2.00%. The yield and gold are inversely proportional to each other.

On the higher side, near term resistance is around $1412 and any convincing break above targets $1428/$1449.

The near term support is around $1389 (23.6% fib) and any break below confirms minor weakness a dip till $1375/$1360-65 (resistance turned into support)/$1346 (low made after Fed policy).

It is good to buy on dips around $1375-76 with SL around $1360 for the TP of $1428.