Gold Prices Drop as Russia Pulls Back

Gold prices reversed course on Tuesday as news broke that Russia was pulling some of its troops from Ukraine. U.S. yields were mixed with the 10-year yield rising and the 2-year yields declining. The dollar moved lower against most major currencies despite a stronger than expected U.S. wholesale inflation report.

Technical Analysis

Gold prices declined to pull back to the former breakout levels. Prices remain above support which was former resistance seen near a downward sloping trend line that comes in near $1,855. Resistance is seen near the November highs at 1,877. Short-term momentum is negative as the fast stochastic generated a crossover sell signal. Medium-term momentum is positive as the MACD (moving average convergence divergence) index has generated a crossover buy signal. This situation occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram prints in positive territory with an upward sloping trajectory pointing to higher prices.

PPI Rises More than Expected

The producer price index increased 1% for the month, compared to expectations that it would rise by 0.5%. Prices rose 9.7%, year-over-year, close to a record in data going back to 2010. Excluding food, energy and trade services, core PPI climbed 0.9% for the month, well ahead of the 0.4% estimate. For the 12 months, the measure increased by 6.9%. Both core and headline PPI gains over the year were 0.1 percentage points lower than the record levels in December 2021.