Gold prices moved higher on Tuesday, rebounding as the dollar moved lower and yields dropped. The decline in the 10-year yield came despite a larger than the expected headline and core CPI report announced on Tuesday by the Department of Labor. Treasury yields appear to be topping out which could lead to a rally in the yellow metal.
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Technical analysis
Gold prices moved higher but failed to capture resistance near the 50-day moving average at 1,756. Support is seen near the 10-day moving average at 1,730. Additional support is seen near the June lows at 1,670. Short-term momentum is negative as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 77, down from an overbought condition near 81, which reflects accelerating negative momentum. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. The MACD histogram is printing in positive territory with a declining trajectory which points to consolidation.
Consumer Prices Surge
Consumer prices surged in March, buoyed by a strong economic recovery and year-over-year comparisons when the Covid-19 pandemic was about to throttle the U.S. economy. The consumer price index rose 0.6% from the previous month but 2.6% from the same period a year ago. The year-over-year gain is the highest since August 2018 and was well above the 1.7% recorded in February. Expectations were for a rise of 0.5% monthly and 2.5% from March 2020. Gasoline prices were the biggest contributor to the monthly gain, surging 9.1% in March and responsible for about half the overall CPI increase.
