Gold Prices Consolidate as Yields Surge

Key Insights

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

Gold prices moved lower and remained rangebound. The dollar moved higher but hit resistance. The 10-year yield and the 2-year yield surged higher following the minutes from the prior Fed meeting which shows that the Fed plans to reduce its balance sheet by 95-billion dollars per month.

The U.S. Federal Reserve officials discussed how they want to reduce the balance sheet at their March meeting, with a consensus amount of around $95 billion, according to the latest meeting minutes. Fed officials also discussed the pace of interest rate hikes ahead, with members leaning toward more aggressive moves.

Technical Analysis

Gold moved lower but remained rangebound. Historical volatility is declining as prices continue to trade sideways.  Prices remain below short-term resistance near the 10-day moving average at 1,933. Support is seen near the 50-day moving average at 1,903. 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.