Gold declined slightly after hitting high of $1310.83. The slight decline in US dollar is supporting yellow metal. It hits intraday high of $1306.93 and is currently trading around $1305.23. Gold was one the best performer in Jan and has jumped more than $50 on account of dovish Fed and global uncertainty.
The major three factors that drive gold prices
US dollar Index: Bearish. DXY has shown a minor jump after hitting low of 96.29.The major support is around 96.20 and any violation below will drag the index below 95.80/95.20.(positive for gold).
USD/JPY: strong. USD/JPY has halted its bearishness after 70 pips decline. It is currently trading around 111.54. The near term resistance is around 112.20 and any break above targets 112.60/113. negative for gold.
US 10 year yield : US 10 year yield recovered slightly after hitting low of 2.57%.The yield was trading weak for past 2- week and lost more than 7%.The near term support is 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 2.599%. positive for Gold.
US 2 year yield: It is trading around 2.47%. 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
On the higher side, yellow metal has broken minor resistance $1306.50 (38.2% fib)and this confirms minor bullishness and a jump till $1312/$1316/$1322.The yellow metal should break above $1346 for further bullishness.
The near term support is around $1292 and any violation below will drag the commodity down till $1280/$1271/$1265.
It is good to buy on dips around $1304-05 with SL around $1299 for the TP of $1321.
