Gold surges to over 1-month tops, closer to $1240 level

Haresh Menghani FXStreet

• A temporary US-China trade truce weighs on USD and continues to underpin.
• US bond yields fall to 3-month lows and remain supportive of the up-move.
• Risk-aversion trade provides an additional boost to metal’s safe-haven status.

Gold built on overnight strong up-move and surged to over one-month tops, closer to $1240 level during the Asian session on Tuesday.

After yesterday's late pull-back, a combination of supporting factors helped the precious metal to regain positive traction for the second consecutive session, also marking the fourth day of up-move in the previous five.

Against the backdrop of a temporary truce in the US-China trade conflict, a sharp decline in the US bond yields exerted some additional downward pressure on the US Dollar and underpinned demand for the dollar-denominated commodity.

In fact, the benchmark 10-year Treasury bond yield fell to three-month lows, farther below the 3.0% mark, amid growing speculations that the Fed will slow the pace of its interest rate hikes in 2019 and remained supportive of the strong bid tone surrounding the non-yielding yellow metal.

Meanwhile, a fresh wave of global risk-aversion trade, as depicted by a sea of red across equity markets, provided an additional boost to the precious metal's safe-haven status and further contributed to the ongoing positive momentum to the highest level since Oct. 26.

It would now be interesting to see if bulls are able to maintain their dominant position or the up-move once again fizzles out at higher levels as focus shifts to this week's main event - the keenly watched US monthly jobs report, popularly known as NFP.

Technical levels to watch

Any subsequent up-move is likely to confront resistance near the $1243-44 region, above which the momentum could further get extended towards $1250 level. On the flip side, the $1234-33 region now seems to protect the immediate downside, which if broken might accelerate the fall back towards $1227-26 horizontal support.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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