Gold prices attempted to move higher during the European trading session but were unable to gain traction despite a weaker dollar. U.S. yields moved higher in tandem with European yields, but lost ground allowing the euro to gain traction. Stock prices moved higher which provided a risk on environment which somewhat capped golds advance. Traders will now eye Friday’s U.S. CPI report which could helped buoy the yellow metal. Tuesday’s JOLTs report shows that job openings continue to move higher, which should eventually put upward pressure on yields, making the dollar stronger and weighing on gold prices.
Gold prices are hovering just above support levels, just above the July 2017 highs at 1,204. A break of that level would lead to a test of the 1,198 level and then the 1,120 region. Resistance on the yellow metal is seen near the 10-day moving average at 1,217. Momentum is flat as the MACD (moving average convergence divergence) histogram prints near the zero-index level with a flat trajectory which reflects consolidation. The MACD line trading sideways which also reflects decelerating momentum. Prices are reflected by the fast stochastic are oversold. The current reading of 16, is below the oversold trigger level of 20 and could foreshadow a correction. In addition, the fast stochastic generated a crossover buy signal in oversold territory which reflects accelerating positive momentum.
Gold miners which are the shares of the companies that trade gold are breaking down, which could foreshadow a further down move in gold prices. Implied volatility on gold is near record low levels. This means that traders do not believe that prices will experience large moves over the course of the next 12-months. This appears to coincide with the 2018 lows in the VIX volatility index which reflects that stock prices, specifically the S&P 500 index, will continue to reflect complacency.