Gold prices edged lower after breakout out on Wednesday. The dollar continued to move lower, which helped buoy the yellow metal. U.S. Treasury yields declined following a softer than expected U.S. PPI figure. The wholesale price inflation numbers follow Wednesday’s stronger than an expected consumer price index.
Gold prices eased slightly, breaking a 4-day winning streak. Prices retreated to a downward sloping trend line that comes in near $1,823. Additional support is seen near the 200-day moving average at 1,800. Resistance is seen near the January highs at 1,831. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index has generated a crossover buy signal. This situation occurs as the MACD line (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).
PPI Came in Softer than Expected
The producer price index, which measures wholesale prices, was up 0.2% for the month, half the 0.4% expected. When measuring PPI year over year it came in at 9.7%, the highest increase going back more than a decade. The monthly gain was a sharp drop-off from the two previous months, which showed gains of 1% in November and 0.6% in October. Excluding food, energy, and trade, the core PPI increased 0.4% for the month, below the 0.5% estimate. PPI for food and energy both fell during the month, declining 0.6% and 3.3%, respectively.