Gold meets strong resistance level after strong late U.S. sesison rally

Gold is off the highs after the yellow metal rallied hard on the back of the FOMC minutes and the market's flight to low beta and risk-off assets.

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Despite the better-than-expected employment data that initially revived investor's appetite for riskier assets such as US stocks, the FOMC minutes stole the glory in the US session. Initially, the minutes were digested as hawkish and the dollar caught a bid and yields rallied. 

However, the markets were looking for more conviction in respect to the FOMC's plans for tapering and reducing the balance sheet. While the minutes revealed that members do indeed see a change in the balance sheet reinvestment policy and warranted "later this year", many favoring a "passive and predictable" approach, there was no decision on tapering or suddenly halting reinvestments. Either way, the market has perceived tapering as negative for sentiment and stock plummeted late on in the shift, yields dropped with the US 10yr treasury yields falling from highs of 2.38% to 2.32%. Gold rallied from $1,243 to $1,256 the high.

Gold levels

Gold is up to test the previous highs of late Asia early European markets. A break higher targets the 4th April high at $1,261 where the price meets the trend line from the lows of 20th March, and a break of which puts gold back into the 14th March bullish channel targeting $1,300. On the flipside, 1194 were the lows of 9th March guarding $1,180.