Gold hits 19-week high as USD sell-off continues

• Gold hit the 19-week high of $1344.75.
• Dollar index drops to 3-year low.
• Momentum studies - MAs favor further upside in gold, RSI shows overbought conditions.

The relentless USD selling is boding well for the safe haven yellow metal.

Gold (XAU/USD) hit a 19-week high of $1344.75 today as the dollar index (DXY) fell to  90.39; the lowest level since December 2014.

The upbeat US data, record high stock markets, and rising Treasury yields are no longer helping the US dollar. This could be because market attention has shifted to the increased odds of faster policy tightening elsewhere (ECB, BOJ, BOC).

The only risk to gold rally could stem from technical conditions - overbought daily RSI. Ahead in the day, the trading volumes could drop as US markets are closed.

Gold Technical Levels

A break above $1357.55 (September high) would expose $1375.14 (July 2016 high) and $1380.26 (38.2% Fib R of 2011-2015 sell-off). On the downside, breach of support at $1336.50 (session low) could yield a test of upward sloping 5-day MA and 10-day MA level of $1331.72 and $1324.65, respectively.