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FxWirePro: Gold trades higher on safe haven demand, good to buy on dips

Gold hits 6- 1/2 month high at $1290 and jumped nearly $30 in previous week on account of global stock market turmoil. It is currently trading around $1289.90.

The major three factors that drive gold prices

 US dollar Index: neutral. DXY has recovered more than 100 pips from low of 95.65. The index should break above 97.12 for further bullishness and its major trend reversal level is around 97.75.(slightly negative for gold).

USD/JPY: weak . USDJPY has shown a huge sell-off in today’s Asian session and hits lowest level since Mar 2018.It has shown a good recovery from the low and pair should break above 110 for further bullishness. It is currently trading around 106.96. positive for gold.

 US 10 year yield : US 10 year yield is trading weak and hits 11-month low. The yield has declined sharply in past tow months and lost nearly 20% from high of 3.25%.It is currently trading around 2.62%.positive for Gold.

 US 2 year yield: It is trading around 2.48%.The spread between US 10 year and 2 year has declined to 14 bpbs from 30 basis point. The spread between 5 year and 2- year yield has inverted (US 5 year yield trading below US2 year yield).

Gold technical

Major support $1183

 On the higher side, yellow metal is consolidating after hitting high of $1290 level. Any break above $1290 will take the gold to next level till $1300/$1320.

The near term support is around $1266 (23.6% fib) and any violation below will drag the commodity down till $1252/$1242 /$1234.

 It is good to buy on dips around $1270 with SL around $1253 for the TP of $1325.

 

 

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