Gold Prices Drop Despite Weaker Inflation Picture

Key Insights

• Gold Prices Continued to Drop
• The Dollar was nearly Unchanged
• U.S. Treasury yields were mixed ahead of the Fed

Gold prices moved lower on Tuesday, declining for a second consecutive trading day. The Fed is the next big impetus for the market. Despite a continued war and no end in sight, prices moved lower as riskier assets initially gained traction. Chinese stocks continue to sell off, along with oil prices. Wholesale inflation was softer than expected.

The headline producer price index rose 0.8% in February from the previous month. That was slightly lower than the 0.9% expected. Core PPI, which excludes food, energy, and trade services, rose just 0.2%. That was below the expectation of 0.6%.

Technical Analysis

Gold prices dropped sharply on Tuesday ahead of the Fed. Resistance is seen near the 10-day moving average at $1,973. Additional resistance is seen near the March highs at $2,070. Support is seen near the former breakout level at 1,916. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal.

The medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).