Gold Prices Consolidate as the Dollar and Yields Break Out

Key Insights

• Gold prices slipped
• The dollar rallied, weighing on gold
• U.S. Treasury yields broke out following Fed Brainard’s comments

Gold prices moved lower and remained rangebound. The dollar increased, breaking out against most major currencies as yields rallied. The 10-year yield and the 2-year yield surged higher following Fed Brainard’s comments that policy tightening would include a speedy reduction in the balance sheet.

The U.S. trade deficit narrowed 0.1% in February, close to a record. Both exports and imports climbed. The deficit in the trade of goods and services slipped to $89.19 billion in February, the Commerce Department reported, compared with an $89.23 billion gap in January. Imports rose 1.3% to $317.8 billion, while exports grew 1.8% to $228.6 billion in February.

Technical Analysis

Gold moved lower but remained rangebound. Prices remain below short-term resistance near the 10-day moving average at 1,935. Support is seen near the 50-day moving average at 1,901. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal.

Medium-term momentum remains negative as the MACD (moving average convergence divergence) histogram prints in negative territory. The trajectory is decelerating, which points to consolidation.