Gold: Range breakdown confirmed as US yields hit three-month highs
- Gold has dived out of its recent trading range of $1,520-$1,475.
- US 10-year yield has hit the highest level in over three months, weakening demand for gold.
Gold is looking south, having witnessed a range breakdown amid the spike in the US treasury yields.
The yellow metal is currently trading at $1,468 per Oz, representing a 1.48% drop on the day. Prices hit a low of $1,460 earlier today. That was the lowest level since Oct. 1.
With the drop to multi-week lows, gold has convincingly dived out of a five-week trading range of $1,520-$1,475.
The breakdown could be associated with the rise in the US Treasury yields. Notably, the 10-year yield has risen from 1.80% to 1.97% –the highest level since Aug. 1 – making the zero-yielding gold looks unattractive.
The rise in yields is also boding well for the Dollar Index, which measures the value of the greenback against major currencies. The index is currently trading at 98.13, representing a 0.20% gain on the day. The American Dollar is gold's biggest nemesis.
Looking forward, the US-China trade optimism and the uptick in the stocks and yields will likely keep gold on the defensive.
A deeper drop toward $1,450 could be seen, unless China's trade data prints well below estimates, forcing investors to boost their exposure to safe-haven assets.
Technical levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
