Gold remains flat even though the Dollar Index hit 14-month low

The overnight sell-off in the American dollar pushed the greenback to a fresh 14-month low of 92.78 against a basket of currencies. Still gold prices remain flat lined, arguably due to stangant yield curve and overbought technical conditions. 

The yellow metal remains flat lined $1268/Oz levels. It did hit a fresh 1-1/2 month high of $1271.17 but quickly ran out of steam. The dismal performance in the wake of a broad based USD sell-off could be due to overbought technical conditions.

The Treasury yield curve - the difference or the spread between the 10-yr yield and the 2-yr yield has remained unchanged around 95 basis points. Hence, the USD sell-off needs to be taken with a pinch of salt. Moreover, the greenback is oversold on the technical charts as well. 

Focus on US personal spending

Personal spending due at 12:30 GMT is expected to come-in at 0.1%, while the growth in income is seen slowing to 0.3% from the previous month’s print of 0.4%. A better-than-expected personal spending may boost USD and weigh over gold. 

Gold Technical Levels

The immediate resistance is seen at $1271.17 ahead of $1274.54 - 76.4% Fib R of June 2017 high - July 2017 low and $1281.16 - June 14 high. On the downside, support is seen at breach of support at $1265.60 - previous day’s low, would open doors for a sell-off to $1257.59 - July 28 low and $1254.70 - July 27 low.