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David Becker
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Gold prices moved lower on Wednesday, despite a declining dollar. The rise in the 10-year yield came despite the budget deficit hitting an all-time high. Treasury yields appear to be topping out, which could lead to a rally in the yellow metal. All the focus seems to on cryptocurrencies, with Coinbase making its IPO.

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Technical analysis

Gold prices moved lower staying sandwiched below resistance near the 50-day moving average at 1,754 and support is seen near the 10-day moving average at 1,736. As prices continue to squeeze between these levels, energy is growing and will likely lead to a breakout or break down. Additional support is seen near the June lows at 1,670. Short-term momentum is negative as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 74, down from an overbought condition near 77, which reflects accelerating negative momentum. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. The MACD histogram is printing in positive territory with a declining trajectory which points to consolidation.

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The Budget Deficit Hits an All-time High

The U.S. government’s budget deficit surged to an all-time high of $1.7 trillion for the first six months of this budget year, nearly double the previous record. In its monthly budget report, the Treasury Department said that the deficit for the first half of the budget year,  from October through March, was up from a shortfall of $743.5 billion for the same period a year ago. The deficit has been driven higher by trillions of dollars in support Congress has passed in successive economic rescue packages since the pandemic struck in early March 2020.

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