Gold trades comatose while short-duration treasury yields rise

Gold prices are trading dead flat in Asia as upside is being capped by rise in short duration treasury yields, while the losses in the equity markets is ensuring there is no big sell-off in prices.

Awiats US data

Having retreated in late August largely due to increased Fed rate hike bets, the metal finds itself at the mercy of the US data. US ISM manufacturing PMI will the wires later today while the all important US non-farm payrolls release is due for release tomorrow.

US ISM manufacturing - employment sub index would be watched out by traders as it could offer some insight into tomorrow’s payrolls release.

Should we trust August payrolls?

Over the last five years, the August non-farm payrolls number has missed estimates by a wide margin only to be revised higher in the subsequent months. Traders/investors should note this as gold and other markets sensitive to US rate hike bets may not respond much to a weak NFP figure.

At the time of writing, the yellow metal was flat lined around $1312/Oz levels. Meanwhile, the two-year treasury yield was up 1.6 basis points at 0.81%.

Gold Technical Levels

A break below $1331.70 (Tuesday’s low) would open doors for a drop to $1300 (psychological support). A daily close below the same could trigger stops leading to a quick fire drop to $1280 (June 17 high). On the higher side, prices could test $1323 (Monday’s high) if resistance at $1317 (last Thursday’s low) is reached. Above $1323, the metal could eye $1340.50 (Friday’s high).