Gold Prices Edge Lower Following Tuesday’s Breakout

Gold prices reversed course after breaking out on Tuesday as the anxiety about geopolitical risks continued. The dollar whipsawed while Treasury yields rose following testimony from Fed Chair Powell and a stronger than expected ADP private payroll report.

There has been no let-up in goepoltical risk as Russians continue to make Ukraine headway. Companies added 475,000 positions for the month, better than the Dow Jones estimate for 400,000. ADP also dramatically revised its January count, from an initially reported loss of 301,000 to a gain of 509,000. That upward revision of 810,000 brought the tally more closely in line with the Labor Department count.

Fed Chair Powell told congression oversight that he sees a series of quarter-percentage-point increases coming, though he left open the possibility of moving more aggressively should inflation persist. The Fed chair said the main goal is to get inflation under control.

Technical Analysis

Gold prices broke out to a fresh 8-year high, and pulled back on Wednesday. Prices Support near the 10-day moving average that comes in near $1,908. Resistance is seen near the June highs at 1,916. Short-term momentum has reversed and turned positive as the fast stochastic generated a crossover buy signal.

The medium-term momentum is positive as the histogram prints positively with the MACD (moving average convergence divergence). The trajectory of the MACD histogram is decelerating, which likely points to a period of consolidation.