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David Becker

Gold prices continued to rise on Thursday, completing a two-day rally. The declined as US yields moved lower paving the way for higher gold prices. Stronger than expected wholesale inflation data released on Thursday followed solid consumer price data released yesterday. Commentary from the Federal Reserve Chair Gerome Powell showed that the Fed would continue to monitor the effects of the trade war between the US and China.

 

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Technical Analysis

Gold prices rebounded slightly notching up its second consecutive winning session. Short term resistance is seen near the 10-day moving average at 1,477, and then the 100-day moving average at 1,478. Support on the yellow metal is seen near the November lows at 1,445 and then the October lows at 1,426.  The 10-day moving average is poised to cross below the 100-day moving average which would show that a short-term downtrend is in place. Short term momentum has turned positive. The fast stochastic generated a crossover buy signal. The current reading on the fast stochastic is 26 accelerating from below the oversold trigger level, which points to higher prices. Medium-term momentum is negative to neutral as the MACD histogram is printing in the red with a rising trajectory which points to consolidation.

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Wholesale Inflation Remains Subdued

The Labor Department on Wednesday reported that the producer price index rose 0.4% in October which was the biggest increase since April, after falling 0.3% in September. On a year over year basis in October, the PPI climbed 1.1%, the smallest increase since October 2016, after advancing 1.4% in the 12 months through September. Expectations were for the PPI to rise 0.3% in October and climb 0.9% on a year on year basis. Core PPI, which excludes food and energy edged up 0.1% after being unchanged in September. Core PPI increased 1.5% year over year through October after gaining 1.7% in the 12 months through September.

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