Gold falters again at 200-DMA

The 200-day moving average line is a tough nut to crack. Once again, gold failed to hold on to gains above the 200-DMA line seen at $1256.30

Tracks 10-year treasury yield

The metal recovered from the low of $1247.31 on Monday after the 10-year treasury yield retreated from 2.39% to 2.35%. The yield is down 1.5 basis points, which explains the yellow metal’s attempt to take out the 200-DMA line.

Fed’s Yellen talked about rate hikes and willingness to move ahead of the curve if economy remains strong. However, there was little or no talk about the balance sheet normalization, thus the long duration yields weakened.

Moreover, gold is inversely related to the size of the Fed’s balance sheet, thus talk of balance sheet normalization is bearish for the yellow metal.

With no major data due for release, the metal remains at the mercy of the US treasury yields and broader market sentiment.

Gold Technical Levels

Only a daily close above the 200-DMA level of $1256.30 would open doors for a sustained move higher to $1284 (Mar 2016 high) and $1300 (psychological hurdle). On the other hand, a breakdown of support at $1247.31 (previous day’s low) would expose $1243.93 (Apr 5 low) and $1239.88 (Mar 31 low).