XAU/USD (gold price in terms of USD) surged to near thirteen-month high at 1273.20 on Monday, bolstered by a weaker greenback after the US labour market conditions report displayed the worst result since 2009. The Labor Market Conditions Index (LMCI) fell to -2.4 points in February, in contrast to a reading of 1 point expected, and following a downwardly revised -0.8 points in January. Monday’s jobs data added to the recent streak of poor US fundamentals and poured cold water on the Fed rate hike expectations at its meeting next week. Moreover, a mild risk-off tone persisting in the markets following China’s announcement of the 2016 target range at 6.5%-7% over the weekend. The prices failed to sustain at higher levels and retreated to 1267.80 at close.

As for today’s trade so far, the yellow metal is seen extending its bullish momentum, having found strong bids near 1266 region, and now looks to test 1280 barrier in the day ahead. The renewed rally in the precious metal can be attributed to the persistent risk-off market profile, especially after the poor Chinese trade data reinforced China slowdown fears and rattled investors’ confidence yet again. While, fading Fed rate hike bets at its March 16 meeting, also contributes to the upsurge in gold. Further, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund continues to remain near the highest since September 2014 at 25.5 million ounces, underpinning the prices. Looking ahead, the upcoming week remains calm with regard to the US economic events while next week’s FOMC meeting remains the main focus. Hence, amid a lack of relevant US economic data lined up for release later today, the broader market sentiment will continue to drive the gold prices.

Technicals – Dropping Fed hike bets for March 16 FOMC to push gold beyond $ 1280

The upside target around 1280-1300 levels determined by the pennant breakout on daily charts remains in place. The prices remain supported near 1265 region and now extend higher, tracking the upward sloping major DMAs. The daily RSI at 71 continues to point higher and thus, suggest more room for upside. A daily closing above 1280 level remains a key for a test of $ 1300 mark. On the flip side, a breach of today’s low at 1265.39, opens doors for further southwards move towards 5-DMA support at 1260.58. A break below the last, selling pressure is likely to intensify drowning gold to the crucial support near 1251-45, the confluence zone of Friday’s low and 10-DMA.

XAUUSD

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