Gold Prices Edge Higher Ahead of Fed Decision

Key Insights

• Gold prices edged higher on Tuesday.
• The dollar consolidated.
• Treasury yields edged lower ahead of Wednesday’s Fed Meeting.

Gold prices rebounded slightly on Tuesday. The dollar moved marginally lower as trader’s squared up positions ahead of the Fed decision on Wednesday. The Fed began its two-day meeting on Tuesday and is expected to increase interest rates by 50-basis points. Treasury yields edged lower despite a more vital than anticipated JOLTS report.

The Labor Department reported that employment openings exceeded the level of available workers by 5.6 million in March. The Jobs Opening and Labor Turnover report that the job postings hit 11.55 million for the month, a record for data back to December 2000. That was up 205,000 from February. Quits totaled 4.54 million and increased from the prior month.

Technical Analysis

Gold prices rebounded slightly on Tuesday. Support is seen near the 200-day moving average at 1,834. Resistance is seen near the 20-day moving average eat 1,929. The 20-day moving average has crossed below the 50-day moving average, which means a medium-term downtrend is now in place.

Short-term momentum has reversed and turned positive as the Fast Stochastic generated a crossover buy signal. Prices are oversold as the fast stochastic prints a reading of 17 below the oversold trigger level of 20.

Medium-term momentum has turned negative as the MACD generates a crossover sell signal. This occurs as the 12-day moving average minus the 26-day moving average crosses below the 9-day moving average of the MACD line. The  MACD (moving average convergence divergence) histogram has a negative trajectory that points to lower prices.