Gold trims gains as 2-year T-yield ticks higher

Gold prices backed off from the session highs as the yield on the 2-year treasury yield, which mimics short-term rate hike bets, ticked higher.

Rejected at $1231

The bullish move in Asia ran out of steam at a high of $1231/Oz levels, opening doors for retreat to $1225 as the treasury yields recovered losses.

More importantly, the 2-year yield which traded flat in early Asia eventually jumped by more than one basis point to near 1%. Meanwhile, at the long end of the curve, the yields remain weak, thereby leading to a flatter yield curve.

Comments from Fed’s Lacker that fiscal stimulus could lead to a steeper Fed rate hike path were largely ignored by the markets.

Gold Technical Levels

A break above the session high of $1231.36 would expose the 5-DMA level of $1241.50 (also Oct 7 low). A violation there could yield $1246.26 (Oct 14 low). On the other hand, breakdown of $1220.17 (session low) would open doors for $1211.41 (previous day’s low) and $1200 (zero figure).