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David Becker

Gold prices edged higher after tumbling on Tuesday as the dollar eased. US yields moved higher as riskier assets like stocks climbed. Better than expected US private payrolls gave a lift to US yields, which initially put pressure on the greenback. The coronavirus saw its larger increase in the number of individuals affected on Tuesday according to a report from the World Health Organization.

 

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Technical Analysis

 

Gold prices rebounded slightly on Wednesday after fallying 2.3% and slicing through support near the 20-day moving averaged at 1,563, which is now seen as resistance. Prices tested these level but were unable to gain traction.  Target support is seen near the 50-day moving average at 1,520.  Target resistance is seen near the January highs at 1,611.

 

Short term momentum has turned negative. The fast stochastic generated a crossover sell signal and is now accelerating lower. The RSI (relative strength index) generated a divergence not able to make fresh higher when prices did and is now accelerating lower, after touching oversold levels. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices.

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Private Payrolls Surge

 

The US economy added 291,000 in private payrolls for the best monthly gain since May 2015, according to ADP and Moody’s Analytics. This was much larger than the 150,000 increase expected. The total also was a sharp gain from the 199,000 in December, which was revised down 3,000 from the initial count. Leisure and hospitality was the best performing sector adding 96,000 new jobs, but education and health services also contributed 70,000 and professional and business services added 49,000.

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