FxWirePro: Gold struggles to close above $1300, good to buy on dips

Gold is consolidating after hitting low of $1280. The slight decline in US dollar is supporting yellow metal.It hits high of $1306.25 on Friday and is currently trading around $1299. 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 shown a minor decline after a jump of nearly 40 pips from low of 96.39.It is facing strong resistance 97.71 and any break above confirms further bullishness and a jump till 98/98.60 likely (positive for gold).

USD/JPY: strong. USD/JPY has halted its bullishness after 90 pips recovery till 111.90 made yesterday.It is currently trading around 111.55. The near term resistance is around 112.20 and any break above targets 112.60/113. negative for gold.

 US 10 year yield : US 10 year yield is trading lower and lost nearly 2.45% on Friday.The yield was trading weak for past 2- week and lost more than 7%.The near term support is 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 2.629%. positive for Gold.

 US 2 year yield: It is trading around 2.45%. The spread between US 10 year and 2 year has declined to 14bpbs 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 $1306.50 (38.2% fib)and break above will take the gold to next level till $1312/$1316/$1322.The yellow metal should break above $1346 for further bullishness.

The near term support is around $1292 and any violation below will drag the commodity down till $1280/$1271/$1265.

 It is good to buy on dips around $1295-96 with SL around $1290 for the TP of $1322.