Gold hits fresh 8-month high at $1334 and shown a decline on account of profit booking. The yellow metal has declined more than $15 from the high. Markets eye US Non farm pay roll for further direction.But overall trend is bullish on account of dovish Fed stance.It is currently trading around $1318.
The major three factors that drive gold prices
US dollar Index: neutral. DXY has taken support near 300- day EMA and jumped more than 50 pips from the low.Any break below 94.98 (300- day EMA) confirms bearish continuation and a dip till 93.80 is possible.(neutral for gold).
USD/JPY: Weak. USD/JPY has recovered slightly form low of 108.49. The pair’s near term support is around 108.50 and any violation below targets 108/107.50.It is currently trading around 108.72.Slightly positive for gold.
US 10 year yield : US 10 year yield is trading lower for 4th consecutive day and declined more than 3%r after dovish Fed.It hits low of 2.616%.The yield jumped more than 10% after forming a minor bottom around 2.54%.The yield has been trading weak for past two months and lost nearly 22% from high of 3.25%.It is currently trading around 2.630%.Positive for Gold.
US 2 year yield: It is trading around 2.42%. 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 resistance around $1335 and break above will take the gold to next level till $1350/$1360.
The near term support is around $1311 and any violation below will drag the commodity down till $1300/$1295.Any break below $1276 confirms minor weakness.
It is good to buy on dips around $1307-08 with SL around $1300 for the TP of $1325/$1350.


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