FxWirePro: Gold trades lower on easing global tension, good to buy on dips

Gold has once again recovered after hitting low of $1301.80. The yellow metal was trading weak on account of strong dollar.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: bullish. DXY continues to trade higher and jumped another 50 pips yesterday. The index is expected to reach 97.78 and any further bullish continuation only above 97.78. (negative for gold).

USD/JPY: Strong  USD/JPY is trading higher and jumped sharply after breaking 110 level.Any daily close above 110 confirms minor bullishness and a jump till 111/112 is possible. It is currently trading around 110.59.Slightly negative for gold.

 US 10 year yield : US 10 year yield has halted its down trend and shown recovery of more than 2.5% from low of 2.624%.The yield has been trading weak for past two months and lost nearly 22% from high of 3.25%.It is currently trading around 2.634%.slightly negative for Gold.

 US 2 year yield: It is trading around 2.516%. The spread between US 10 year and 2 year has declined to 17bpbs 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 $1315 and break above will take the gold to next level till $1321/$1330.The yellow metal should break above $1335 for further bullishness.

The near term support is around $1305 and any violation below will drag the commodity down till $1298 (20- day MA)/$1295.Any break below $1276 confirms minor weakness.

It is good to buy on dips around $1303-04 with SL around $1298 for the TP of $1334.