Gold prices rebounded on Monday and recaptured the 200-day moving average following a softer than expected US ISM manufacturing report. The move was temperated by a rise in US yields as riskier assets gained traction. The Dollar tumbled to fresh lows for 2020 hitting a 2.5 year low, which paved the way for higher gold prices.
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Gold prices rebounded on Tuesday after and recaptured the 200-day moving average after falling below this technical level for the first time since March. Short term support is seen near the 200-day moving average at 1,800 and then the July lows at 1,756. Resistance is seen near the 10-day moving average at 1,825. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. The current reading on the fast stochastic is 18, up from 9, but still below the oversold trigger level of 20, which could foreshadow a correction. Medium-term momentum remains negative as the MACD (moving average convergence divergence) histogram prints in the red with a declining trajectory which points to lower prices.
ISM is Softer than Expected
The dollar eased which helped buoy gold following a report from the Institute for Supply Management which said that the manufacturing index fell to 57.5% in November from a 21-month high of 59.3% in the prior month. Expectations had been for the index to decline to 58%. The New Orders Index registered 65.1 percent, down 2.8 percentage points from the October reading of 67.9 percent according to the ISM. The Production Index registered 60.8 percent, a decrease of 2.2 percentage points compared to the October reading of 63 percent.