David Becker
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Gold prices moved lower on Wednesday and continued to consolidate. The dollar sold off but the decline in the greenback failed to lift the yellow metal. Since gold prices are quoted in U.S. dollars, the decline in the greenback should have helped lift gold prices. U.S. Yields moved higher on Wednesday following a softer than anticipated U.S. Treasury auction. Gold prices have failed to benefit from safe-haven flows, and have not been able to gain traction when riskier assets are rallying. One of the issues is that managed money is net long futures and options. The current open interest according to the latest commitment of traders report from the CFTC shows managed money has 3-times as many long positions in futures and options as short-positions.

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Technical analysis

Gold prices moved lower on Wednesday but continued a consolidative tone.  Support is seen near the 20-day moving average at 1,797.  Resistance is seen near the 50-day moving average at 1,836. Short-term momentum has flip-flopped, turning negative as the fast stochastic generated a crossover sell signal. Medium-term momentum is decelerating. The MACD histogram is printing in positive territory with a declining trajectory which points to consolidation. Despite the sideways price action, gold continues to trade in a short-term uptrend. If the recent resurgence in the greenback subsides, gold prices are likely to benefit.

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