FxWirePro: Gold hits 6-month high on global stock market meltdown, good to buy on dips

Gold is trading higher and has jumped more than $20 on global stock market selling.It is currently trading around $1259.65.

The major three factors that drive gold prices

 US dollar Index: neutral. DXY has lost nearly 100 pips after Fed and has taken support near 89-day EMA .US dollar index’s major support is around 96.06 any break below confirms further weakness and a decline till 95 is possible.It is currently trading around 96.42. (positive for gold).

USD/JPY: weak . The pair is trading weak and has lost more than 100 pips yesterday. It has taken support near 200-day MA .It is currently trading around 111.38. The near term support is around 110.80 and any break below targets 109. Slightly positive for gold.

 US 10 year yield : US 10 year yield has shown a minor recovery of more than 2.5%. It is currently trading around 2.807%.positive for Gold.

 US 2 year yield: It has regained nearly 2.8% from low of 2.617%.The spread between US 10 year and 2 year has decreased sharply to 13bpbs from 30 bpbs. The spread between 5 year and 2- year yield has inverted for the first time since 2007.

Gold technical

Major support $1183

Major resistance - $1243

 On the higher side, major resistance is around $1270 (trend line resistance) and any convincing break above targets $1289/$1300.

The near term support is around $1247 (5-day MA) and any violation below will drag the commodity down till $1238/$1232/ $1225 (89-day EMA).

 It is good to buy on dips around $1247-48 with SL around $1236 for the TP of $1289.