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David Becker
Gold daily chart, August 09, 2019

Gold prices were nearly unchanged for a second straight trading session as prices consolidated after surging this week. The increased volatility in the market pushed the yellow metal up more than 4% during the week. The Euro gained traction later in the week and the greenback retreated paving the way for higher gold prices. US PPI was in line with expectations reflecting subdued whole price inflation,


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Technical Analysis

Gold prices consolidated for the second consecutive trading session. Resistance is now seen near the March 2013 highs at 1,616. Support is seen near the 10-day moving average at 1,458. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal in overbought territory. The current reading on the fast stochastic is 91 well above the overbought trigger level of 80 which could foreshadow a correction. Medium-term momentum has also turned positive as the MACD (moving average convergence divergence) generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the black with an upward sloping trajectory which points to higher gold prices.


US PPI was in Line with Expectations

The Labor Department reported on Friday that producer prices increased by 0.2% last month after nudging up 0.1% in June. On a year over year basis, July the PPI increased 1.7% after advancing by the same margin in June. Expectations have been for PPI to rise 0.2% in July and increase 1.7% on a year-on-year basis. Excluding the volatile food, energy producer prices edged down 0.1% last month. That was the first decline since October 2015 and followed an unchanged reading in June. Core PPI increased 1.7% in the 12 months through July after rising 2.1% in June.

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