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David Becker
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Gold prices tumbled on Friday, breaking through trend line support as the dollar moved higher. The strong move in yields throughout the week, weighed on the price of the yellow metal. Gold prices broke down despite a decline in US  treasury yields as the 10-year treasury pulled back to 1.49% from a high of 1.61% on Thursday.  US personal income surged in January while consumer spending was slightly softer than expected.

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Technical analysis

Gold prices tumbled breaking through trend line support seen near 1,765, and poised to test the  June lows at 1,670.  Resistance is seen near former support: the breakdown level at 1,765 and then the 10-day moving average at  10-day moving average at 1,787. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Prices are now oversold as the relative strength index (RSI) is printing a reading of 28, below the oversold trigger level of 30. Medium-term momentum flip-flopped and turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. The MACD histogram is printing in negative territory with a downward sloping trajectory which points to lower prices.

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Personal Income Soars

Personal income jumped 10% after a 0.6% increase in December, beating expectations that it would rise by 9.5%. The gain followed the issuance of $600 stimulus payments that Congress approved. Consumers took those checks and spent them quickly, sending retail sales surging and pushing overall expenditures up 2.4% for the month, a touch below the estimate of 2.5%. The personal consumption expenditures price index, which is the Federal Reserve’s preferred inflation gauge, rose 0.3% for the month, slightly ahead of the 0.2% expectation but was up just 1.5% year over year.

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