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David Becker
Comex Gold

Gold prices continued to head south as profit-taking continues to perpetuate as riskier assets gain traction. US yields moved higher with the 10-year yield hitting a 2-week high. The dollar traded sideways, after rallying on Monday, as the yield differential consolidates. China reported August CPI and PPI, both came in a tick higher than expected.

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Technical Analysis

Gold prices continued to slide moving lower for a 4th consecutive trading session. Resistance is seen near the 10-day moving average at 1,523. Support is seen near the 50-day moving average at 1,469. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. The fast stochastic is accelerating to the downside reflecting increasing negative momentum. Currently the fast stochastic is printing a reading of 13, which is well below the oversold trigger level of 20 which could foreshadow a correction. Medium-term momentum is negative as the MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices.

China reported August CPI and PPI, which came in slightly better than expected. August CPI was seen rising 2.8% year over year and PPI was seen falling -0.8% year over year.  Still, the PBOC is focused on growth, not inflation.  China’s SAFE scrapped foreign investment limits in local stock and bond markets.  This is a move to add stimulus. The $300 billion limits on QFII and RQFII programs was removed.  That limit was not binding, as only $111 billion had been used.  US yields hit 2-week highs. The 10-year yield of 1.63% is the highest since August 23, while the 3-month to 10-year curve inversion of -28 bp is the best since August 13.

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