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David Becker
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Gold prices dropped on Wednesday as U.S. yields rose and the dollar gained traction. The U.S. treasury yield’s rise came despite a weaker than expected US ADP private payroll report that missed expectations. Additionally, the US ISM services report, which reflects the majority of the U.S.’s economic activity, also came in softer than expected.

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Technical analysis

Gold prices fell and were unable to hold higher levels as US yields rose. Resistance is seen near prior trend line support seen near 1,765. Target support is seen near the June lows at 1,670.  Additional resistance is seen near the 10-day moving average at  10-day moving average at 1,766. Prices are oversold as the relative strength index (RSI) is printing a reading of 28, below the oversold trigger level of 30. The decline in the RSI reflects accelerating negative momentum.  Medium-term momentum flip-flopped and turned 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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US Data is Softer than Expected

According to a report Wednesday from ADP, US Private payroll growth disappointed in February despite otherwise encouraging signs of economic growth. Companies added just 117,000 positions for the month, well below the 225,000 forecast. The total also represented a sharp decline from the upward revised 195,000 jobs in January. U.S. services industry activity unexpectedly slowed in February amid winter storms. The Institute for Supply Management (ISM) said on Wednesday its non-manufacturing activity index fell to a reading of 55.3 last month from 58.7 in January, which was the highest since February 2019.

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