Having cleared the key 200-day barrier, gold accelerated the up-move and surged through $1250 level to its highest level since May 3.
The precious metal’s latest leg of up-move during early NA session could be attributed to the ongoing slump in the US treasury bond yields. Escalating political uncertainty in the world’s largest economy spoofed global financial markets on Wednesday and drove flows towards perceived safe-haven assets, resulting into a sharp bullish spike in the yellow metal.
Adding to this, intense selling pressure surrounding the greenback, in wake of the latest concerns, further collaborated to the strong bid tone surrounding the metal. In fact, the key US Dollar index plunged to its lowest level since early Nov. and provided an additional boost to dollar-denominated commodities – like gold.
Meanwhile, fading expectations for continuous Fed rate-hike actions through 2017 was also seen benefitting the non-yielding metal and lifted it to fresh two-week tops near $1255 level.
Technical levels to watch
A follow through buying interest beyond $1256 level has the potential to continue lifting the commodity towards its next hurdle near $1264 level ahead of $1268-70 strong barrier. On the downside, $1247 area (200-day SMA) now seems to act as immediate support, which if broken might trigger a profit taking slide towards $1242 level en-route $1237 area.