Gold prices attempted to continue to move higher but were met with resistance forming a doji day. Gold has been benefiting by a weaker dollar which had seen its momentum sapped. President Trump continues to try to talk down the dollar, which has weakened versus the Euro. Treasury yields have declined allowing the dollar to ease paving the way for higher gold prices.
Gold prices moved higher on Wednesday recapturing resistance which is now support seen near the 10-day moving average at 1,192. Target resistance is seen near the July 2017 low which was former support now resistance at 1,204. Gold prices generated a doji day where the open and the close aer at the same level which points to indecision. Prices have now hit an inflection point. Momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD index (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 is printing in the black with an upward sloping trajectory which points to higher prices. The fast stochastic recently generated a crossover buy signal and is surging higher reflecting accelerating positive momentum.
Gold Prices Rebound as the Dollar Gives Back Gains
Gold was able to rebound as the dollar lost traction after surging higher from the beginning to August to the middle of the month. U.S. yields have declined from a high of 3% in early August to 2.8% losing a robust 20-basis points. The yield differential decline by approximately 20-basis points which was the driving force behind the decline in the US dollar. Since gold prices are quoted in dollars a stronger dollar makes gold more expensive in other currencies. This means that gold prices will need to decline for prices to normalize in other currencies.