Gold prices on Comex kicked-off a new week on a bullish note. Now extending its winning streak into third day, as uncertainty over Trump’s policies and Friday’s mixed US labour market report poured cold water over a summer Fed rate hike, which boosted the non-interest bearing gold at the expense of the US treasury yields.
The CME Fed Watch Tool, which reflects the probability of FOMC rate moves for upcoming meetings, showed that the chances of a no rate hike at the FOMC meeting in March stands at 86.7%, slightly higher from Friday’s 82.3%.
Now looking at the intrinsics, gold shows a strong correlation to the USD/JPY price action and treasury yields, both of which suggest further upside in-stored for the yellow metal.
While in terms of technicals, gold displays a potential cup and handle formation that will be confirmed only if the prices close above $ 1219 on a daily basis. Gold prices are poised to test the 200-DMA resistance located at $ 1265 should the cup and handle bullish break out is confirmed.
To conclude, any pullback in gold towards $ 1200 levels (confluence of 100-DMA and key psychological level) can be seen as a good buying opportunity, with gold seen as an ultimate store of value amid rising political tensions, in light of Trump’s presidency and the UK’s Article 50 trigger.
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