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David Becker
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Gold prices rebounded sharply on Monday, as the dollar eased and yields moved sideways. Despite the rebound, prices formed an inside day which is a sign of indecision. With the 2-year yield continuing to remain buoyed following the decision by the Federal Reserve which saw the dot plots change slightly, it will be hard for gold to gain traction.

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Technical analysis

Gold prices were nearly rallied sharply on Monday reversing some of last week’s decline. Prices remain well above support near the November 2020 lows of 1,764, Resistance is seen near the 50-day moving average at 1,832.  Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Prices are oversold. The current reading on the fast stochastic is 15, below the oversold trigger level of 20 which could foreshadow a correction. The RSI is also oversold printing a reading of 34 up from 28, which was below the oversold trigger level of 30 which could foreshadow a correction. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) as the MACD (moving average convergence divergence) index generated a crossover sell signal. The MACD histogram is printing in negative territory with a declining trajectory which points to lower prices.

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The Fed’s View is Mixed

Minneapolis Federal Reserve President Neel Kashkari said he wants to keep the U.S. central bank’s benchmark short-term interest rate near zero at least through the end of 2023. Kashkari’s remarks show he’s in a decided minority in an increasingly hawkish Fed.

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