Gold strengthens in Asia…Fed rate hike a distant dream?

Gold prices advanced in Asia on broad based sell-off in the US dollar amid risk-on in the equity markets.

Prices test trend line resistance

Trend line drawn from June 3 low and June 24 low comes around $1346/Oz levels. Prices currently hover around the same on account of a 0.36% drop in the USD index. The sell-off in the USD gathered steam in the NY session and continues in Asia.

Moreover, markets do not see fed moving rates this year despite back to back strong payrolls report and other key data sets like retail sales. Furthermore, stock markets are on the fire. Still, the Fed rate hike looks like a distant dream

No wonder gold prices are back on the front foot and looking to take back major chunk of Friday’s payrolls led losses.

Gold Technical Levels

A break above $1347 (5-DMA) would expose major hurdle at $1367 (Aug 2 high). A violation there could yield a re-test of $1375 (July 11 high). On the other hand, a breakdown of support at $1339 would open doors for a drop to $1333 (23.6% of 1199-1375), under which losses could be extended to $1320 (July 14 low).