• Broad-based USD weakness underpins. • Risk-off mood provides an additional boost. • Recovering US bond yields fail to cap gains.
Gold was seen building on its bullish momentum further beyond the $1300 handle and rose to fresh three-month highs during the mid-European session.
The precious metal began 2018 on a firmer note and was being propelled higher by a weaker greenback. In fact, the key US Dollar Index sank to its lowest level since September and underpinned demand for dollar-denominated commodities - like gold.
Adding to this, the prevalent risk-off environment, as depicted by a sea of red across European equity markets, provided an additional boost to the commodity's safe-haven appeal and helped offset a goodish rebound in the US Treasury bond yields, which tend to drive flows away from the non-yielding yellow metal.
Today's strong up-move could also be attributed to some follow-through technical buying, especially after recent breakthrough important moving averages (100 & 200-day) and the key $1300 psychological resistance break on Friday.
It would now be interesting to see if bulls continue to drive spot prices higher or opt to take some profits off the table amid near-term overbought conditions and ahead of this week's important releases, FOMC meeting minutes and the keenly watched NFP data.
Technical levels to watch
Immediate resistance is pegged near $1315-16 area, above which the momentum is likely to get extended towards $1331 supply zone with some intermediate resistance near the $1223-24 region.
On the flip side, $1306 level now becomes an immediate support to defend, which if broken is likely to accelerate the fall below the $1300 handle back towards the $1287 region (100-day SMA).
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