Ichimoku Analysis (4 hour chart)
Tenken-Sen- $1835.71
Kijun-Sen- $1848.35
Gold prices extended their bearish mode following the release of hot US PPI data. The producer price index rose to 6% YoY, well above an estimated 5.6%. The inflation for the month of Jan increased by 0.70% monthly basis vs an estimated 0.20%. It hits a fresh February low of $1826.08 and is currently trading around $1826.81.
US dollar index-Bullish. Minor support around 101.50/100.80. The near-term resistance is 104.80/106.
According to the CME Fed watch tool, the probability of a 25 bpbs rate hike in Feb jumped to 81.9% from 90.80% a week ago.
The US 10-year yield trades higher on hot inflation data. Any daily close above 3.95% targets $4.30%. The US 10 and 2-year spread narrowed to -76 basis points from -88% bpbs.
Factors to watch for gold price action-
Global stock market- bullish (negative for gold)
US dollar index - Bullish (bearish for gold)
US10-year bond yield- Bullish (negative for gold)
Technical:
The near–term support is around $1825, a break below targets of $1800. The yellow metal faces minor resistance around $1850, and a breach above will take it to the next level of $1900/$1925/$1950.
It is good to sell on rallies around $1838-40 with SL around $1860 for TP of $1800.
