Gold is trading lower shortly before the regular session opening. Buyers tried to support the market early in the session in reaction to yesterday’s technical reversal to the upside, but there was no confirming follow-through rally.
At 0900 GMT, June Comex Gold is trading $1287.60, down $3.90 or -0.31%.
The market is also trading inside Wednesday’s range which suggests investor indecision and impending volatility. The market is being capped by a major Fibonacci level at $1296.20 and yesterday’s high at $1296.40.
The current support isn’t much. It’s just yesterday’s low at $1285.70. It’s even unfair to call it support. The daily chart indicates there is plenty of room to the downside with the December 12 main bottom at $1247.20 the next major downside target.
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Gold will be pressured today by rising Treasury yields and a stronger U.S. Dollar. However, increased geopolitical tensions could make gold a desirable safe haven asset.
On Tuesday, gold hit a new high for the year, while the U.S. Dollar Index climbed to its highest price for the year. Demand for gold fell after the yield on the 10-year Treasury note hit a new multi-year high Wednesday, topping 3.1 percent for the first time since July 8, 2011.
The two-year Treasury note also hit a new multi-year high of 2.593 percent, its highest since August 11, 2008.
On the geopolitical front, U.S. President Donald Trump acknowledged on Wednesday it was unclear if his summit with North Korea would go ahead after Pyongyang threatened to pull out of the unprecedented meeting.
Look for an upside bias today if buyers can sustained a rally over $1296.40. Look for another steep sell-off if $1285.70 is taken out with conviction.