Gold Prices Rebound as the Dollar Takes a Breather

Key Insights

• Gold prices reversed higher.
• The dollar dropped sharply as Treasury Yields declined.
• Existing home sales declined.

Gold prices moved higher on Wednesday as the dollar reversed lower. Following Tuesday’s robust Housing Starts data, existing-home sales declined to take the luster out of Treasury yields. The yield differential moved in favor of the Euro and Yen, putting downward pressure on the greenback.

According to the National Association of Realtors, the sales of existing homes dropped 2.7% in March to an annualized rate of 5.77 million units. February’s reading was revised downward with a larger-than-usual dent, from 6.02 million units to 5.93 million. March sales were 4.5% lower than the same period in 2021. The median price of an existing home sold in March was $375,300, increasing 15% yearly.

Technical Analysis

Gold prices rebounded on Wednesday. Prices rebounded up to prior support is now resistance scene near the 10-day moving average at 1,955. Support is seen near the 50-day moving average at 1,931.

Short-term momentum has turned negative as the Fast Stochastic generated a crossover sell signal. Both the RSI and the Fast Stochastic are in the middle of the neutral range, reflecting consolidation in the price of gold.

Medium-term momentum is positive but decelerating and poised to generate a sell signal. The  MACD (moving average convergence divergence) histogram has a negative trajectory. The failed break-out points to further rangebound price action.