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FxWirePro: Gold trades lower on strong US dollar and rising US bond yields, good to sell on rallies

Major resistance- $1217

The major three factors that drive gold prices

 

US dollar Index: Strong. DXY has shown a good recovery of more than 50 pips after better than expected US jobs data.US economy has added 201000 jobs in the month of Aug and wage growth came at better than expected. The index hits high of 95.46 and is currently trading around 95.40. The index should break below 94.85 (55- day EMA) for further weakness. The index has almost formed a double top around 95.70-75 and any major bullishness only above that support 94.31 holds. (Slightly negative for gold).

 

USDJPY: Trend slightly Bearish. The pair hits low of 110.38 and shown a minor recovery. Short term trend is slightly bearish as long as resistance 112.15 holds. Any daily close below 109.78 confirms bearish continuation and a dip till 109/108 likely. Slightly positive for gold.

 

US 10 year yield : It has jumped more than 2.5% from the Thrusday’s low of 2.865 on hopes of further rate hike. It is currently trading around 2.943%. Any break above 3.0160% confirms further bullishness.

 

US 2 year yield: The spread between US 10 year and 2 year has reduced to 26 bpbs from 35 bpbs.

 

Gold technical

Major support $1183

Major resistance - $1217

 

The yellow metal has declined more than $10 from the high of $1206.80 on strong US dollar. It hits low of $1193 and it is currently trading around $1194.79. The trend is slightly as long as support $1183 holds.

 

On the higher side, any break above $1200 will take the commodity till $1208/$1217/$1224/$1230.

 

It is good to sell on rallies around $1200-01 with SL around $1190 for the TP of $1183

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