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David Becker
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Comex Gold

Gold prices moved lower on Monday as the dollar moved sideways gaining against the yen but losing ground again the euro. US yields moved higher in the wake of the stronger than expected US retail sales, which was delayed by a month due to the government shutdown. Gold failed to remain buoyed ahead of the Brexit vote which is scheduled for this week.

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Technical Analysis

Gold prices moved lower on Monday after failing to take out resistance near the 10-day moving average at 1,299. Support is seen near the February lows at 1,276. The trend appears to be moving lower. The 10-day moving average crossed below the 50-day moving average which shows that a short-term downtrend is now in place. Positive momentum is accelerating. The fast stochastic generated a crossover buy signal in oversold territory. The fast stochastic is printing a reading of 17, below the oversold trigger level of 20 which could foreshadow a correction. Negative momentum is decelerating as the MACD (moving average convergence divergence) histogram is printing in the red with a flattening trajectory which points to consolidation.

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US Retail Sales Comes in Stronger Than Expected

US retail sales unexpectedly rose in January driving by increases in purchases of building materials and discretionary spending. The commerce department reported that US retail sales increased by 0.2% in January which was delayed because of the government shutdown. Data for December was revised lower shows that retail sales dropped 1.6% down from the 1.2% previously reported. The decline in December retail sales was the largest drop seen since September of 2009 during the great recession. Expectations were for January retails sales to be unchanged month over month. Sales in January increased 2.3% year over year. Excluding automobiles, gasoline, building materials and food services, retail sales rebounded 1.1%in January after a downwardly revised 2.3% plunge in December. The downward revision to December core retail sales could have an impact on the government’s fourth-quarter gross domestic product estimate.

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