Key Insights
- Gold prices were higher on Tuesday.
- The dollar reversed course and moved lower.
- Treasury yields declined across the curve.
Gold prices rebounded slightly on Tuesday as the dollar edged lower and yields reversed course. A weaker greenback will buoy gold prices since gold is quoted in U.S. dollars.
The dollar moved higher as yields increased, pushing the interest rate differential in favor of the greenback.
The U.S. Commerce reported that the trade gap in goods and services fell to 19.1% in April from the prior month to $87.1 billion, retreating from March’s record $107.7 billion deficit. Imports fell 3.4% to $339.7 billion, the first month-on-month decline since July last year, driven by a drop in clothing, household goods, toys, pharmaceutical products, and finished metals. Exports continued their upward trend in recent months, rising 3.5% to $252.6 billion.
Technical Analysis
Gold prices rebounded from support near the 200-day moving average at 1,841.
Resistance is seen near the 10-day moving average of 1851.
Short-term momentum turns positive as the Fast Stochastic generates a crossover buy signal.
Medium-term momentum turns positive as the MACD generates a crossover buy signal. This occurs as the 12-day moving average minus the 26-day moving average crosses below the 9-day moving average of the MACD line.
The MACD (moving average convergence divergence) histogram has a positive trajectory pointing to higher prices.
