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David Becker

Gold prices continued to trade sideways. The lackluster movement of the US dollar kept gold prices in a relatively tight range. The big decline in US treasury yields on Monday failed to help buoy the yellow metal. German IFO for January declined more than expected, which put some downward pressure on the Euro, which capped the upside in gold prices. The January low was higher than the December low on gold prices. The January high was higher so a gliding uptrend remains in place which could lead to higher prices.

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Technical analysis

Gold prices are trading in a tight range on Monday, forming a doji day where the open and close are at the same level. This is a sign of indecision.  Support near the 10-day moving average at 1,850. Resistance is seen near an upward sloping trend line that comes in near 1,939. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. The sideways movement of price action gives this crossover little credence. Medium-term negative momentum has decelerated as the MACD (moving average convergence divergence) histogram is printing in the red with a rising trajectory, which points to consolidation.

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German Confidence Slides

The German IFO survey for January came in lower than expected. The index fell 90.1 versus 91.4 expected and was revised to 92.2 in December.  The expectations component declined to 91.1 vs. 93.6 expected and a revised 93.0 in December, while the current assessment fell to 89.2 vs. 90.6 expected and 91.3 in December.

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