Gold Prices Slide as the Dollar Gains Traction

Key Insights

• Gold prices moved lower on Monday
• The dollar continued to trend higher after taking a brief respite
• U.S. Treasury yields surged higher, elevating mortgage rates

Gold prices eased on Monday as the dollar rallied. Gold is quoted in dollars, and usually, a stronger dollar weighs on gold prices. Stronger treasury yields buoyed the dollar as the market continued to price in higher rates. The yield differential is moving in favor of the greenback, generating headwinds for gold.

Market forces are already hampering the housing market. According to Mortgage News Daily, the average rate on the 30-year fixed mortgage shot significantly higher, rising 24 basis points to 4.95%. It is now 164 basis points higher than it was one year ago.

Technical Analysis

Gold edged lower on Monday. Near former resistance, support is seen near the 10-day moving average at $1,936. Resistance is seen near the March highs at 2,070. Short-term momentum is negative as the fast stochastic generated a crossover sell signal.

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