Gold sheds over $10.00 on renewed dollar's demand

• Base metals strengthen on the back on easing geopolitical tensions, fears of shortfalls.
• Pressure on gold will likely be temporal, and hardly a game changer.

Dollar's sudden strength is affecting all of its major rivals and not just currencies, as gold prices have shed over $10.00 in a couple of hours. The bright metal which peaked for the day at around $1,355.00 a troy ounce, is now trying to hold above 1,342.00 level. Rising Treasury yields are behind the current dollar rally, fueled by solid US data and easing geopolitical concerns.  

The yield on the 10-year Treasury note surged to 2.92%,  having struggled to remain this high ever since the year started, but easing concerns about the health of the US economy after Wednesday's surge of shorter-term note yields.

Base metals hold on to their recent strength, with nickel, up 10%, and aluminum reaching levels last seen in 2011, both soaring today, which should cap the decline in gold despite the ongoing downward hiccups, triggered by external factors. Metals' strength has been attributed to possible future shortfalls.

Technical outlook

Spot gold eased within range, holding above the 23.6% retracement of its December/January rally at 1,335.25, the immediate support. The daily chart shows that technical indicators have lost upward momentum, but remain within positive territory, while the commodity holds above all of its moving averages, with only the shortest one losing upward strength, all of which supports the view of a limited pullback as long as the mentioned Fibonacci support holds. A double top at 1,366.00 makes of the level a major bullish breakout point that could hardly be challenged today, but it's still at risk of easing.