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David Becker

Gold prices continued to break down on Tuesday after collapsing on Monday US yields continued to back up. The decline in the yellow metal occurred despite a falling dollar. Generally, a declining greenback bodes well for gold prices. Better than expected US home prices continued to buoy US yields which paved the way for lower gold prices.

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Technical analysis

Gold prices broke down on Tuesday as the downtrend accelerated following Monday’s breakdown which pushed through trend support near 1,860 which is now seen as resistance. Additional resistance is seen near the 10-day moving average at 1,865. Support is seen near the July lows at 1,756. Short-term momentum has turned negative recently as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 8, well below the oversold trigger level of 20, which could foreshadow a correction. Medium-term momentum remains negative as the MACD (moving average convergence divergence) histogram prints in the red with a declining trajectory which points to lower prices.

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Home Prices Surged in September

Home-price growth accelerated in September, as families left large cities and look for dwelling in suburbs. The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, rose 7% in the year that ended in September, up from a 5.8% annual rate the prior month. September marked the highest annual growth rate since May 2014. The Case-Shiller 10-city index gained 6.2% over the year ended in September, compared with a 4.9% increase in August. The 20-city index rose 6.6%, after an annual gain of 5.3% in August. Expectations were for the 20-city index to gain 5.6%.

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