Gold drops to Feb high on broad based risk-on

Omkar Godbole FXStreet Contributor

Gold prices dropped to the February high of $1263 levels as the major US equity indices neared record highs, while the treasury yields jumped to two-week highs.

Risk-on trade is just sweeping the globe, thus investors have little incentive to hold the zero-yielding safe haven yellow metal. Strong US corporate earnings and Trump’s tax talk added fuel to Macron rally, making the risk-on rally a bit more sustainable. The geopolitical uncertainty appears to have fizzled out as well.

The drop in gold is in line with the losses in other traditional safe haven assets like Treasuries and funding currencies like Yen. The 10-year treasury yield rose to 2.34%, the highest level since April 11, meanwhile, the Dollar-Yen pair jumped to 111.35; its highest level since April 10.

Gold Technical Levels

A break above $1273.30 (Apr 7 high) would open up upside towards $1290 (Apr 21 high) and $1297.40 (Apr 17 high). On the other hand, a breakdown of support at $1263 (Feb high) could yield a sell-off to $1249.50 (Oct 7 low) and $1245.50 (Apr 5 low).

	TREND INDEX	OB/OS INDEX	VOLATILY INDEX
15M	Bullish	Neutral	Low
1H	Bearish	Oversold	Shrinking
4H	Strongly Bearish	Neutral	Expanding
1D	Slightly Bullish	Overbought	Shrinking
1W	Bullish	Neutral	Low
Updated 154 GMT

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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