Gold: 76.4% fib and bearish divergence

Gold hits 8-month high around $1314.75 on political uncertainty increases demand for safe haven assets. Markets eye Fed policy , Brexit vote and US Non Farm Payroll for further direction. It is currently trading around $1313.13.

The major three factors that drive gold prices

 US dollar Index: Weak. DXY halted its 7 day of winning streak and lost more than 100 pips from minor top 96.68.The index is facing resistance around 96.68 (61.8% fib) and a break above targets 96.95/97.75.On the higher side any break above 97.75 confirms bullish continuation.(slightly positive for gold).

USD/JPY: Weak. USD/JPY has shown a minor selling of nearly 70 pips after hitting high of 109.99. The pair should break above 110 for further bullishness. It is currently trading around 109.21.Slightly negative for gold.

 US 10 year yield : US 10 year yield has lost more than 2% from this week high 2.74%. The yield jumped more than 10% after forming a minor bottom around 2.54%.The yield has declined sharply in past two months and lost nearly 22% from high of 3.25%.It is currently trading around 2.746%.positive for Gold.

 US 2 year yield: It is trading around 2.59%. 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

Gold continues to trade higher for third consecutive day and jumped nearly $10 yesterday.Technically the pair has formed bearish divergence and minor correction till $1300/$1295. On the higher side, yellow metal is facing resistance around $1318.26 (76.4% fib) and break above will take the gold to next level till $1325/$1343.

The near term support is around $1300 and any violation below will drag the commodity down till $1294/$1291 (10- day MA)/$1280.Any break below $1276 confirms minor weakness.

 It is good to sell on rallies around $1316-17 with SL around $1322 for the TP of $1300/$1295.