FxWirePro: Gold trades slightly higher on Italy’s political uncertainty, good to buy on dips

• Gold prices has shown a minor recovery on account of Italian political uncertainty. Italy 2- year bond yield was up 158 basis point and hits high of 2.83% highest level till 2012and 10 year yield rose 76 basis point to 3.44% highest since 4 years. Italy Credit default swaps jumped by 59% to 262 bps, the highest level since Oct 2013. The upside momentum is capped due to strength in US dollar index. DXY has shown a good recovery till 95.03 from low of 93.86.It is currently trading around 94.90. The yellow metal hits high of $1306.49 and is currently trading around $1299.59.
   
• The major three factors to be watched for gold price movement are

1. US Dollar index – strong (negative for gold)
2. USDJPY- Weak (positive for gold)
3. US 10 –year yield – 2.74 % (12% decline) (positive for gold)
    

• The yellow metals near term resistance at $1307 (200- day MA) and any convincing break above will take the yellow metal till $1316 (55- day EMA)/ $1324 (50% fibo). 
   
• On the lower side, near term support is around $1294 and any break below will drag the yellow metal down till $1285/$1280.

It is good to buy on dips around $1295-97 with SL around $1290 for the TP of $1308/$1316.