Gold Prices Remain Little Changed Amid Aggressive Fed Expectations

Key Insights

• Gold prices stabilized as its safe-haven appeal declines
• The dollar eased against most major currencies amid aggressive Fed expectations
• U.S. Treasury yields surged higher

Gold prices remained little changed as yields reached two-year highs and the dollar eases against other major currencies. Expectations for aggressive Fed policy reduced demand for non-yielding bullion. Markets are subdued today as E.U. and U.S. strike a deal to increase liquid natural gas to the E.U. to limit its exports from Russia. Oil prices reverse gains in volatile trading as supply concerns ease, given that the CPC pipeline will resume exports.

U.S. Pending Home Sales, a forward-looking indicator based on contract signings, dropped 4.1%. The reading showed a decline for the fourth month in a row. Sales decreased by 5.40% year over year from February 2021. The spike in mortgage rates, beginning in January and further rising in February, generated the decline. The 30-year fixed-rate mortgage climbed 73 basis points from December 2021 to February 2022. Additionally, the medium monthly payment takes up more of a consumer’s income, indicating that the labor market is becoming more expensive. The spike is coming at a suboptimal time since spring is typically a busy time for home buying.

Technical Analysis

Gold edged lower on Friday. Near former resistance, support is seen near the 10-day moving average at $1,937. Resistance is seen near the March highs at 2,070. Short-term momentum is positive but has a downward trajectory. The fast stochastic is moving toward a crossover sell signal.

The medium-term momentum has turned negative, but the downward movements’ trajectory is slowing. The MACD histogram is printing in negative territory with a decelerating trajectory that points to a gold price consolidation.