Gold drops 1% as Treasury yields rally

Gold is fast losing height, now down 1% at $1224/Oz as Trump’s tax talk boosted the risk appetite and pushed the treasury yields higher. 

Strong support at $1220

Strong support is seen at $1220 (previous resistance/double top pattern). The support could be put to test and may be breached if the treasury yields continue to rise. At the time of writing, the 10-year yield was up two basis points at 2.416%. At the short-end of the curve, the 2-yr yield was up one basis point.  

US import price index due later today may not have much impact on gold, especially if the US equities continue to scale new heights. Moreover, anticipation of tax cuts in the US could overshadow negative data pieces. 

Gold Technical Levels

A break below $1220 (previous resistance) would open doors for $1214.70 (Jan 18 high), under which the psychological level of $1200 could be put to test. On the higher side, the session high of $1128 could offer resistance, which, if breached could yield a re-test of $1235.40 (Feb 6 high) and $1246.15 (previous day’s high).