Gold retreats from 7-month high

Gold prices retreated from the 7-month high of $1296 in Asia in what appears to be a chart driven move. The metal was last seen trading around $ 1292/Oz levels. 

Bearish RSI divergence on intraday charts

The hourly chart confirmed a bullish price RSI divergence during the overnight trade. The 4-hour RSI is overbought as well. The overbought conditions on smaller time frames could be behind the pullback in the yellow metal from a 7 - month high of $1296. 

Low bond yields, geopolitical risks support gold

Euro zone government bond yields hit multi-week lows on Tuesday. German Bund yields fell to their lowest level in nearly six weeks at 0.262%. The US 10-year yield hit a fresh 7-month low of 2.13%.  The drop in the yields is usually positive for gold. 

Meanwhile, geopolitical risks - diplomatic rift between Qatar and several Arab states, including Saudi Arabia and former FBI chief James Comey's testimony before the US Congress on Thursday - and UK election uncertainty could keep the metal well bid. 

Gold Technical Levels

A daily close above $1300 (zero figure) would open up upside towards $1321.50 (Apr 2013 low) and $1337.34 (Nov 2016 high). On the downside, breach of support at $1279.58 (previous day's low) would expose $1269.50 (May 26 high) and $1259.24 (June 2 low).