Gold likely to test USD 1250/Oz in the short-run

London (Jan 6)  FXStreet Editor and Analyst, Omkar Godbole, anticipates Gold to test USD 1250/Oz in the short run as rate hike expectations in the US keep the save haven asset trade on the upside.

Key Quotes

“Gold trades at a three-week high today, amid widespread expectations of an interest rate hike in the US sometime in the middle of this year.”

“The decline in Treasuries yields indicates, safe haven buying amid a rout in crude prices, concerns of a slowdown in China and Eurozone, and renewed fears of ‘Grexit’. The 10-yr yields have dropped 13%, while the USD index gained 2.54%. Thus, Gold – safe haven asset - has been the under performer so far on account of rate hike speculations in the US.”

“Given the Federal Reserve minutes are unlikely to provide any hawkish surprises on Wednesday, gold appears poised to gain strength in the short-term.”

“The relative performance of Gold since November end also indicates that a strong US jobs report on Friday shall do little to hurt Gold prices.”

“Gold trades well above the 50-DMA and the 100-DMA levels located at 1191 and 1202 levels respectively.”

“Prices have repeatedly failed to fall below 1170 levels despite strong US jobs data and hawkish statements from Fed chair. Yellen.”

“The USD index appears overbought, while the US 10-year Treasury yields are likely to remain under pressure on account of risk aversion.”

“Thus, Gold is likely to test USD 1250 levels in the short-term.”

Source: FXstreet