Overall trend - bearish
Gold is consolidating in narrow range between $1211 and $1234.95 even after the fed monetary policy. Fed has kept its interest rates unchanged at 1.75% to 2% and has upgraded the assessment of the economy from solid to strong.This confirms that there will be two more rate hikes this year. The yellow metal hits low of $1215.83 and is currently trading around $1220.
The major three factors to be watched for gold price movement are
- US Dollar index – neutral (neutral for gold)- DXY has shown a minor jump of more than 25 pips from the yesterday’s low of 94.49 after fed policy. DXY is trading in narrow range and it has formed temporary top around 95.65. It is currently trading around 94.71.
- USD/JPY- slightly weak (positive for gold)- It is showing a minor correction after hitting high of 112.15. It is currently trading around 111.55.
- 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 2.68% (0.53% lower). The spread between 2 year and 10 year yield (2.988%-2.68%) is 30 basis point slightly decreased from 34 basis point.
The pair is facing strong support at $1217 and any break below will take the yellow metal till $1209/ $1200 (61.8% fib)/$1160.
The near term resistance is around $1240 (20-day MA) and any convincing break above will take the yellow metal till $1250/$1260.
It is good to sell on rallies around $1228-30 with SL around $1237 for the TP of $1201/$11
