Overall trend - bearish
Gold has lost more than $15 in yesterday’s trading as US dollar index hits 2 week high. The yellow metal hits low of $1206.64 at the time of writing. The rising trade tensions and hawkish US Fed is supporting US dollar. Markets eye US Non farm payroll for further direction. It is currently trading around $1220.
The major three factors to be watched for gold price movement are
- US Dollar index – strong (negative for gold)- DXY has shown a good jump of more than 50 pips from the yesterday’s low of 94.61. DXY has formed temporary top around 95.65 and any break above confirms bullish continuation. It is currently trading around 95.14.
- USD/JPY- slightly weak (positive for gold)- It is showing a minor correction after hitting high of 112.15. It is currently trading around 111.65.
- US 10 –year yield – 2.98% (hits high of 3.016% and shown a minor decline). It is slightly negative for gold.
- US 2 year yield 2.67% (0.23% higher). The spread between 2 year and 10 year yield (2.988%-2.67%) is 31 basis point slightly up from low of 22 basis point.
The pair is facing strong support at $1207 and any break below will take the yellow metal till $1200 (61.8% fib)/$1190/$1160.
The near term resistance is around $1220 (7-day MA) and any convincing break above will take the yellow metal till $1230 (20- day MA)/$1236.
It is good to sell on rallies around $1215-16 with SL around $1221 for the TP of $1201.
