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David Becker
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Gold prices continued to move lower on Monday as the dollar edged higher. The move into the greenback seems to be a flight to safe-haven assets. Since gold prices are quoted in U.S. dollars, the rallying greenback is weighing on gold prices. The rally in the dollar comes despite lower U.S. yields which dropped following a weaker than expected home builders index. Bonds are also benefiting from a flight to quality.

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Technical analysis

Gold prices dropped again on Monday. Prices touch support is seen near the 20-day moving average at 1,794.  Resistance is seen near the 50-day moving average at 1,8367. Short-term momentum has flip-flopped, turning negative as the fast stochastic generated a crossover sell signal. The fast stochastic has dropped rom overbought territory reflects accelerating negative momentum. Medium-term momentum is decelerating. The MACD histogram is printing in positive territory with a declining trajectory which points to consolidation.

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Home Builders Confidence Slips

Higher construction costs are starting to eat away at Homebuilder confidence. A monthly sentiment index from the National Association of Home Builders dropped 1 point to 80 in July. The index stood at 72 in July 2020. The index hit a record high of 90 in November of last year. Of the index’s three components, current sales conditions fell 1 point to 86. Buyer traffic declined 6 points to 65, and sales expectations in the next six months rose 2 points to 81.

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