Higher yields indicate higher interest rates. They are now at four-year highs.
U.S Treasury yields finally settle above 3.0%, hit four years high and the tradable dollar index (DXY) jumped to 2018 high. Post the retail sales data, the yield on the benchmark 10-year treasury settle above 3% resistance eventually indicating that the U.S economy is improving and more hikes are coming.
As we pointed in our earlier article, we remain to our forecast, “expect four Fed hikes in 2018, but more confirmation will be available at the June meeting”. Overall, further dollar strength lot depends on the yields movement.
As bond yields rise money starts shifting from risk asset class, like equities to Bonds which offers less risk. The Dowjones 30 index(KTM: US30) down by 0.75%. The index has been locked in a tight range since the end of Jan, facing resistance at the middle of the tight range.
The spikes in the dollar dragged the Gold price below its multi-support level. We expect further selling with targets at 1277.00$ and 1265.00$. In Q2 potential support zone spread between 1265.00$-1260.00$. Silver-spotted with a bearish H&S pattern (Daily chart) but still above the neckline (16.10-16.00). A move below 16.00$ needed to forecast 15.60$ levels. Platinum has been dropping in a falling channel (below chart) with immediate multi-support zone spread between 888.00$-873.00$ levels. Interestingly Palladium spotted with an inverse H&S pattern.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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