Gold Prices Surge Higher but Fail at Key Resistance

• Gold prices rallied sharply but hit key resistance
• The Dollar whipsawed and ended the day lower
• U.S. yields moved higher as Energy Imports surged

Gold prices continue to receive a geopolitical bid. The war and how it is impacted the capital markets take center stage every day. Trade data released on Tuesday reflect higher import prices driven by energy. President Biden announced on Tuesday that the U.S. would halt taking Russian imported oil. The price of gasoline in the U.S. hit an average record high.

U.S. trade deficit hit a new record in January as imports of energy and vehicles increased while exports fell. Strong demand, which took foreign goods off the shelves of U.S. stores, drove imports to record levels.

Technical Analysis

Gold prices broke out and closed at the highest level since August 2020. Prices reached but fell just shy of the August 2020 highs near 2,075. Support is near the 10-day moving average that comes in near $1,943. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal.

Prices are overbought. The RSI is printing a reading of 81, above the overbought trigger level of 70, foreshadowing a correction.

The medium-term momentum is positive as the histogram prints positively with the MACD (moving average convergence divergence). The trajectory of the MACD histogram is upward sloping, which likely points to upward prices.