Gold Prices Rise to Test Key Resistance

Gold prices moved higher and are attempting to test key resistance despite a stronger U.S. dollar. U.S. Treasury yields were mixed as the 2-year rose and the 10-year fell. Wednesday, the Federal Reserve will announce its decision on monetary policy. Expectations are that the Fed will continue to unwind its quantitative easing program but will keep interest rates unchanged. Case Shiller announced that Housing Prices rose in November, while the Richmond Fed reported a decline in manufacturing in the region in January.

Technical Analysis

Gold prices moved higher on Tuesday and are poised to test target resistance. 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 positive as the fast stochastic generated a crossover buy signal. Prices are overbought as the fast stochastic prints a reading of 91, above the overbought reading of 80. 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.

U.S. Housing Prices Rise

Home prices rose 18.8% year over year on the S&P CoreLogic Case-Shiller National Home Price Index. The year-over-year gains decelerated as the October pace was a 19% annual gain. The 10-city composite climbed 16.8% annually, down from 17.2% in the previous month. The 20-city composite grew 18.3%, down from 18.5% in October.