Gold Prices Reverse Course and Fall 3.5% for the Week

Key Insights

• Gold prices edged lower on Friday
• The Dollar whipsawed and was Nearly Unchanged
• U.S. Treasury yields moved lower despite a robust jobless claims report

Gold prices reversed course and moved lower, finishing the week down 3.5%. Prices had a small pop mid-week following the Fed’s decision to raise rates and their bearish tone to future rates. The markets are pricing in U.S. Fed fund rates at 1.75% by 2022.

According to a CNBC survey, the chance of a recession in the United States is growing. Forecasters have raised their outlooks for a downturn and boosted their inflation projection. The probability of a recession in the U.S. was raised to 33% in the next 12 months, up 10 percentage points from the Feb. 1 survey. The chance of a recession in Europe stands at 50%.

Technical Analysis

Gold prices dropped and fell for the week. Resistance is seen near the 10-day moving average at $1,968. Support is seen near the 50-day moving average at 1,868. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal.

The medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).