FxWirePro: Gold struggles to close above 20-day MA amid weak dollar,good to buy on dips

Gold has once again declined slightly after showing a jump above $1285 level amid weak US dollar. US market continues to trade higher with Dow Jones and S&P500 hits fresh all time high yesterday.The yellow metal hit low of $1278.95 and is currently trading around $1279.04.

US dollar Index: Bearish. DXY continues to trade lower for 3rd consecutive day and declined nearly 90 pips from high of 98.33. Minor trend is slightly weak and any break below 97.35 confirms further weakness and a decline till 96.85 likely.It is currently trading around 97.53. (positive for gold).

USD/JPY: weak . USD/JPY has taken support near 55-day EMA and shown a minor recovery.The near term support is 111.23 (55- day EMA) and any violation below will drag the pair to next level till 111/110.79. Positive for gold.

 US 10 year yield : US 10 year yield more than 2% from high of 2.55% made yesterday. Markets eye US Fed policy for further direction.In short term yield has lost more than 4.5% in past 10 trading days. Overall it has been trading weak for past four months and lost nearly 25% from high of 3.25%.It is currently trading around 2.49%. Slightly positive for Gold.

 US 2 year yield: It is trading around 2.274%. The spread between US 10 year and 2 year has declined to 23bpbs from 30 basis point. The spread between 3 month and 10- year yield  inversion has reversed (US 10 year yield trading above US 3 month).

Gold technical

On the higher side, near term resistance is around $1292 (55- day EMA) and any convincing break above targets $1296/$1300. The yellow metal should break above $1300 for further bullishness.

The near term support is around $1280 and any break below will drag the commodity down till $1274/$1270. Any bearish continuation only below $1266.

It is good to buy on dips around $1280-81 with SL around $1274 for the TP of $1300.