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David Becker

Gold prices moved lower on Wednesday as the dollar hit fresh 3-year highs. US yields rose, pushing the dollar index above 101, for the first time since March of 2017. The flow into the US dollar shows that investors do not want to be in assets other than the dollar and are keeping their assets in cash. With the dollar gaining traction, gold prices that are quoted in the US dollar are facing headwinds. There continues to requests from the Administration and Congress to pass a fiscal policy bill, but neither side appears willing to move forward. So far, the House of Representatives has passed a bill, but it has yet to be taken up by the senate.

 

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Gold prices dropped on Wednesday generating an inside day which is a higher low and a lower high which is a sign of indecision. Prices closed below the 200-day  which is seen near 1,500, which is now seen as resistance.  Additional resistance is now seen near the 10-day moving average at 1,595. Support is seen near an upward sloping trend line at 1,490.

Short term momentum is turning positive as the fast stochastic generated a crossover buy signal in oversold territory. The current reading on the fast stochastic is 23 coming from an oversold reading of 15. Medium-term momentum is negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram sliced through the zero-index line which reflects accelerating negative momentum. The MACD accelerated to the lowest level seen since September of 2011.

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