Gold - Doji and a bearish follow through?
Gold’s two way price action and a flat closing at $1254.95 on Monday led to the formation of a classic ‘Doji candle’, which highlights indecision in the market place.
The safe haven yellow metal is under pressure this Tuesday morning. Prices currently hover around $1253. Chart experts say a bearish price action following Monday’s Doji candle would confirm the trend reversal.
Awaits Fed minutes
Fed minutes due for release tomorrow will show if the policymakers still see the drop in the inflation as transitory. The USD may strengthen and gold could feel the heat if the minutes ignore low inflation and talk about policy normalization.
Focus on yield curve
The data docket is light today, so the focus is almost entirely on the yield curve. The difference/spread between the 10-yr yield and the 2-yr yield currently stands at 0.80 basis points. A further narrowing of the spread would support gold and vice versa.
Gold Technical Levels
A break below $1252.50 (1-hr 50-MA) would open up downside towards $1246.02 (23.6% Fib R of $1204.70-$1258.79) and $1241.03 (June 21 low). On the other hand, breach of resistance at $1256.46 (daily high) would expose $1258.90 (June 23 high) and $1265.01 (May 18 high).
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
