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James Hyerczyk
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Gold

Gold futures are trading at their highest level since February 25 and threatening to break out over a major retracement level at $1788.50 shortly before the New York opening on Monday. After seeing early selling pressure at the start of the week, the precious metal stabilized then surged to the upside in an attempt to reestablish the fresh uptrend.

At 10:43 GMT, June Comex Gold is trading $1787.20, up $7.00 or +0.39%.

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Today’s rally is being fueled by a dip in U.S. Treasury yields and a plunge in the U.S. Dollar against a basket of major currencies. Additionally, now that the technical double-bottom has been confirmed, we’re starting to see more speculative interest from trend and momentum traders. The overall bullish theme, however, is being driven by investors buying into the idea that the Fed will maintain an accommodative monetary policy for a long time and that any spike in economic growth, especially inflation, will be “transitory”.

In other news, speculators cut their bullish positions in COMEX gold and raised them in silver contracts in the week to April 13, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

Treasury Yields Start the Week Lower as Retreat Continues

U.S. Treasury yields ebbed lower on Monday morning, continuing to fall from recent highs. The yield on the benchmark 10-year Treasury note fell to 1.564% at 08:15 GMT. The yield on the 30-year Treasury bond dipped to 2.253%, CNBC reported.

The drop in Treasury yields drove the U.S. Dollar Index into its lowest level since March 3 as the heavy selling pressure threatened to trigger an acceleration to the downside. A weaker U.S. Dollar tends to drive up foreign demand for dollar-denominated gold.

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Daily Forecast

With Treasury yields and the U.S. Dollar seemingly positioned to accelerate to the downside, gold sits in a similar position, but poised to breakout above the $1788.50 resistance level with the next target price $1817.60.

The direction of prices the rest of the session on Monday should be determined by trader reaction to $1788.50.

For a look at all of today’s economic events, check out our economic calendar.
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