Gold trades at 4.5-month low, double top breakdown confirmed
- Gold fell to 4.5-month low yesterday as rising Treasury yields put a bid under the US dollar.
- The double top reversal in gold weekly chart suggests the tide has turned in favor of the bears.
Gold (XAU/USD) fell to $1,288 in the US session yesterday - the lowest level since Dec. 28 as the US dollar strengthened on the back of rising Treasury yields.
As of writing, the metal is changing hands at $1,291/Oz - down 5.4 percent from the recent high of $1,365.
The US 10-year treasury yield rose to 3.09 percent yesterday - its highest level since 2011. The resulting widening of the yield differentials pushed the greenback higher across the board. The dollar index, which tracks the value of the greenback against majors, rose to fresh 2018 high of 93.46.
The combination of rising bond yields and a strong US dollar weighed heavily on the "zero-yielding yellow metal".
Gold technical outlook - double top breakdown in weekly chart
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Gold fell below $1,302 (neckline support), confirming a double top bearish reversal as anticipated. The bearish breakdown has opened the doors for a sell-off to $1,240 (double top reversal target as per the measured height method).
In the short-run, the 100-week moving average (MA) located t $1,277 may offer support. Meanwhile, on the higher side, $1,302 (former support turned resistance) is a key level to watch out for in the short-run.
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
