Gold - Bullish move stalls above $1290 ahead of Jackson Hole

Gold bulls are again struggling to push through the key resistance zone of $1290-1300, despite Wednesday’s sharp rally from the low of $1282. 

The curve or the spread between the 10-year Treasury yield and the 2-year Treasury yield narrowed to 86 basis points yesterday, thus keeping USD gains under check.

Still, the bullish move stalled at $1291 in Asia, largely due to caution ahead of the Yellen’s speech at the Jackson Hole event. The central bank chief will speak on financial stability. Investors will look for clues on when the Fed plans to unwind its balance sheet and whether a December rate hike is still on the table. 

Yellen may throw caution to the wind and hint at September balance sheet runoff, although the reaction in gold prices depends on how the bond markets receive Yellen’s comments. A steeper yield curve would be bearish for gold and vice versa. 

Gold Technical Levels

The metal was last seen trading around $1288/Oz. A break above $1293.83 [Aug 21 high] would open up upside towards $1300 [zero levels]. On the downside, breach of support at $1287.51 [5-DMA] could yield a sell-off to $1282 [previous day’s low].