Gold hits one-week low as Treasury yields rise

• Gold under pressure as Treasury yields rise.
• Risk aversion in equities may put a bid under yellow metal.

Gold hit the one-week low of $1308.22 in Asia on fears that treasury yields may continue to rise.

Gold, being a zero-yielding safe-haven asset, usually responds negatively to rising yields/rates. This explains the sharp drop from yesterday's high of $1320.20.

The 10-year treasury yield closed above 2.5 percent yesterday for the first time since March. Following the sharp rise, bond market expert Bill Gross tweeted: " Bond bear market confirmed today. 25-year long-term trendlines broken in 5yr and 10yr maturity Treasuries".

Further, speculation is gathering steam that the 10-year yield could rise to 3 percent or more this year. Consequently, gold is on the defensive but may find bids if the rising yields end up destabilizing the equity markets.

Gold Technical Levels

As of writing, gold (XAU/USD) is trading at $1310 levels. A break below $1304.77 (23.6% Fib R of December low - January high) would open up downside towards $1299.24 (Nov. 27 high) and $1291.60 (38.2% Fib R). On the higher side, a move above the 10-day MA level of $1313.93 would expose $1232.44 (Jan. 5 high) and $1326.04 (Jan. 4 high).