Gold is trading slightly higher above $1300 level. The slight decline in US dollar is supporting yellow metal. It hits intraday high of $1307.38 and is currently trading around $1307. 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 is trading lower after minor jump till 96.63.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 111.21. 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 recovered slightly after hitting low of 2.57%.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 2.599%. 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 has broken minor resistance $1306.50 (38.2% fib)and this confirms minor bullishness and a jump 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 $1304-05 with SL around $1299 for the TP of $1321.
