Gold Prices Slide but Hold Support

Key Insights

• Gold prices moved lower.
• The dollar rallied to end the week.
• Treasury yields were mixed.

Gold prices moved lower on Friday as the dollar broke out. Treasury yields were mixed, with the 10-year yields breaking higher. The yield differential moved in favor of the greenback. The Fed Chair was on the tape this week, solidifying a 50-basis point rate hike.

Federal Reserve Chair Powell’s comments on interest rates were in line with expectations, but yields continued to rise. The Fed chief endorsed the quicker pace of tightening short-term interest rates. The commentary was backed up by Treasury Secretary Yellen, who said that inflation was likely to remain elevated for a while.

Technical Analysis

Gold prices dropped to support on Friday. Prices could not push through resistance near the 10-day moving average at 1,959. Support is seen near the 50-day moving average at 1,935.

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 has turned negative as the MACD generates a crossover sell signal. This occurs as the 12-day moving average minus the 26-day moving average crosses below the 9-day moving average of the MACD line. The  MACD (moving average convergence divergence) histogram has a negative trajectory that points to lower prices and accelerates negative momentum.