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Gold awaits range breakout

  • Gold stuck between 50% Fib retracement and 61.8% Fib retracement.
  • Focus on USD index.  

Gold (XAU/USD) did rally on Monday, but is still stuck in the range defined by $1281 (50% Fib R of Jul/Sep rally) and $1263.09 (61.8% Fib R of Jul/Sep rally).

Having failed consistently in breaching the 61.8% Fib retracement, the bears finally loosened their grip on Monday. Prices jumped from $1266 to $1282.96 and currently trade around $1280 levels.

Focus on USD index

The greenback took a hit on Monday as the 10-year treasury yield fell to 2.314 percent; the lowest level since Oct. 19.

As of writing, the dollar index (DXY) is flat lined at 94.65 levels. The greenback may weaken further if the yield drops below 2.3 percent, in which case the metal could witness an upside break of the trading range. On the other hand, recovery in the treasury yields boost demand for USD and push gold back below $1270 levels.

Gold Technical Levels

An end of the day close above $1281 (50% Fib R of Jul/Sep rally) would open doors for $1298-$1300 levels (target as per the measured height method). On the downside, breach of support at $1263.09 (61.8% Fib R of Jul/Sep rally) would signal continuation of the sell-off from the high of $1357.55 and could yield $1245.18 (target as per the measured height method).

 

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