Gold vs. US dollar; Bullish 'pin bar' or Short-term double top?
|Currently, the Gold spot is trading at 1236.85, marginally down -0.03% or (34)-pips on the day, having posted a daily high at 1237.72 and low at 1226.11. On the other hand, the US 10yr treasury yields has a trading range 2.41% to 2.45%, up +0.15% on the day or +0.0036.
Chinese demand matters; Hedge Fund legend loads the truck
As reported on the wires, via Bloomberg, "Investors in the largest exchange-traded fund backed by gold have bought more than 40 metric tons this month, helping to boost prices 6.8 percent this year to $1,236.86 an ounce. There were seasonal gains in the run up to Lunar New Year in January when the Chinese typically purchase gold as gifts. On the other hand, Billionaire Stan Druckenmiller said this month he was a buyer in December and January because of the lack of clarity on U.S. government policy."
As usual, market participants 'play' Gold as a hedge against inflation and risk via fiat money expansion or government uncertainty. When the next elections in the eurozone clock closer the metal would have no other direction than up as long as the results do not deliver the necessary certainty of a better and more robust European Union.
Bond market still not on board with a March rate hike
Historical data available for traders and investors indicates during the last 8-weeks that Gold spot had the best trading day at +1.41% (Jan.5) or 1664-pips, and the worst at -1.11% (Jan.18) or (1331)-pips.
Technical levels to watch
In terms of technical levels, upside barriers are aligned at $1262 (200-DMA), then at 1290 (high Nov.10) and above that at $1330 (high Nov.9). While supports are aligned at $1206 (low Feb.3), later at $1189 (50-DMA) and below that at $1140 (low Jan.3). On the other hand, Stochastic Oscillator (5,3,3) seems to shift direction to head south. Therefore, there is evidence to expect further US dollar gains in the near term.
Today's Japanese candlestick seems to clock a 'bullish pin bar' that can lead to expect another push higher towards $1260.
The greenback – gauged by the US Dollar Index seems muted 'at 50-DMA gates' which contributed to a sell-off across the board. However, the bullish tone hasn't been diluted as long as the buck holds 100.20 handle. Now, there is technical evidence to expect either a break above 101.60 or sell-off towards the 100-DMA.
In term of technical levels, upside barriers are aligned at 101.74 (high Feb.15), then at 102.48 (high Jan.9) and above that at 103.20 (high Dec.23). Meanwhile, supports are aligned at 99.96 (100-DMA), later at 98.54 (low Nov.11) and finally below that at 97.54 (low No.8).
USD/CHF up 0.71% on the day; dollar bulls back in the game above 1.0044
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