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David Becker

Gold prices moved higher on Wednesday and closed at fresh 8-years highs, despite a better than expected US industrial production report. The dollar moved lower but settled off session lows which paved the way for higher gold prices. US yields were mixed, as the curve flattened with the 2-year yield moving higher and the 10-year edging lower.

Technical Analysis

Gold prices closed at session highs and hit a fresh 8-year high. The opening price was near the close which is a sign of indecision. Medium-term momentum is positive to neutral as the MACD (moving average convergence divergence) histogram is printing in the black with a flattening trajectory which points to consolidation. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal. The current reading on the fast stochastic is 85, above the overbought trigger level of 80 which could foreshadow a correction.

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Industrial Production Rise

Industrial production—rose 5.4% in June month over a month according to the Federal Reserve. That was a bigger increase than the 4% rise anticipated. The index for May was unrevised at 1.4% while the index for April was revised down to a 12.7% drop from a 12.5% drop. June’s rebound was led by the manufacturing sector, which posted a 7.2% gain, driven by the production of autos and parts. Mining output decreased 2.9% and utilities output rose 4.2%.

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