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David Becker
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Gold prices dropped on Thursday, U.S. yields rose and the dollar tested the February highs. The U.S. treasury yield’s rise came despite a smaller than expected rise in U.S. jobless claims. The Labor Department reported that initial jobless claims in the week ended February 27 totaled 745,000, a touch below the 750,000 estimates. Despite dovish commentary from Fed Chair Powell, his focus on inflation took higher treasury yields, which weighed on gold prices.

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Technical analysis

Gold prices fell as Treasury yields rose. Resistance is seen near the 10-day moving average at 1,758. Target support is seen near the June lows at 1,670.   Prices are oversold as the relative strength index (RSI) is printing a reading of 27, below the oversold trigger level of 30. The fast stochastic is printing a reading of 10, below the oversold trigger level of 20 which could foreshadow a correction.  Medium-term momentum has negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. The MACD histogram is printing in negative territory with a downward sloping trajectory which points to lower prices.

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Inflation Talk Weighs on Gold

The Fed chief Jerome Powell reiterated that the central bank would be “patient” before changing policy even as it saw inflation pick up in what it expects would be a transitory fashion. Powell added price increases above the Fed’s 2% target for a couple quarters or more would not cause consumers’ long-term inflation expectations to materially change. Despite his commentary, the focus on inflation pushed yields higher and weighed on gold prices.

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