FxWirePro: Gold surges to 7- year high on Middle East tension, good to buy on dips

Ichimoku Analysis (Daily chart)

Tenken-Sen- $1536

Kijun-Sen- $1520

Gold has surged sharply more than $50 after Iran strikes missile at US forces in Iraq at al-Asad and Erbil. Iranian state Tv said that attack is retaliation after the US killed top commander in a drone attack. The yellow metal hits high of $1611.70 and is currently trading around $1592.

US ISM services came at 55 vs estimate 54.5 and business activity rose 5.6 points to 57.2 in Dec.US 10- year bond yield has shown gap down opening on an escalation of US-Iran and lost nearly 3%. The spread between US 10 and 2-year has slightly narrowed to 26 bps from 35 bps.

The pair hits 7-year high around $1611 and any break above targets $1625/$1640. On the flip side, nearby significant support is around $1574 (23.6% fib) and any violation underneath will drag the gold down till $1550 (5- day MA)/$1527/$1507.

It is good to buy on dips around $1565-67 with SL $1555 for the TP of $1610/$1625.