Gold Prices Rally and are Poised to Break Higher

Gold prices moved higher and are poised to break out. Despite comments from Russia they are pulling their troops back, it does not appear to be happening on the ground. U.S. yields were mixed, with the 10-year yield rising and the 2-year yields declining. Despite a stronger-than-expected retail sales report, the dollar moved lower against most major currencies.

Technical Analysis

Gold prices rallied and are poised to break higher. Prices remain above support which was former resistance seen near a downward sloping trend line that comes in near $1,853. Resistance is seen near the November highs at 1,877. Short-term momentum reversed and turned positive as the fast stochastic generated a crossover buy 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.

Retail Sales Grows More than Expected

Retail sales for the month rose 3.8%, much better than the 2.1% expected. Retail sales are a combination of prices and volumes, so higher inflation will buoy retail sales. Excluding auto sales, the retail gain was 3.3%, falling 2.8% in the previous month. Online shopping contributed the most on a percentage basis, with nonstore retailers seeing a gain of 14.5%. Furniture and home furnishing sales increased 7.2%, while motor vehicle and parts dealers saw a 5.7% rise.