Gold Prices Fall as the Fed Points to Rate Hikes

Gold prices moved lower after the Fed decision. The dollar moved higher along with the entire Treasury yield curve, which edged up. Despite the move up in Treasury yields, riskier assets like stocks outperformed. The movement into riskier assets likely weighed on the yellow metal. The interest rate curve is pricing in 100-basis points of tightening in 2022. The upward movement in Treasury yields has weighed on refinancing. Mortgage refinance applications, which are highly sensitive to daily rate moves, fell 13% for the week and was 53% lower year over year, according to the Mortgage Bankers Association’s

Technical Analysis

Gold prices moved lower on Wednesday and whipsawed after the Fed. Support is seen near the 10-day moving average at 1,1830.   Resistance is seen near a downward sloping trend line that comes in near $1,860. Short-term momentum has turned 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.