Gold: gains capped at 50% Fibo level

FXStreet (Mumbai) - Gold prices extended the gains in the European session, although gains appear at the 50% Fib retracement level of the up trend from the low of USD 1131.9 (Nov. 7 low) to USD 1307.3 (Jan. 22 high) located at USD 1219.6.

Gold gains as Treasury yields weaken

The yellow metal strengthened tracing the weakness in the US Treasury yields due to Fed’s “patient” approach with regards to the timing of interest rate hike. The 10-year Treasury yield in the US hit a low of 1.938%, before recovering to trade at 1.953%. A slight recovery in the 10-year yield could have capped gains in the metal around 50% Fib level.

Meanwhile, lackluster trading in the major European stock markets lends support to gold prices. Further gains could be seen in the metal if the first tier economic data like consumer prices, durable goods and jobless claims due for release in the US disappoint market expectations.

Gold Technical Levels

At the moment, the metal is trading at USD 1219.30/Oz levels; up 1.5% for the day. The immediate resistance is seen at 1219.60, above which gains could be extended to 1237.88 (200-DMA). On the flip side, failure to rise above 1219.60 could push the metal back to 1213.97 (10-DMA).