Gold Prices Surge Breaking Out of January Range

Gold prices surged higher as the dollar eased and yields slipped. The dollar index pulled back, which helped buoy the yellow metal. Despite hitting a pre-pandemic high on Tuesday, the long end and short end eased, allowing the dollar to consolidate. U.S. Housing starts hit a 9-month high.

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Technical Analysis

Gold prices moved surged higher on Wednesday. Support is seen near the 10-day moving average at 1,1815   Resistance is seen near the November highs at 1,877. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Prices are overbought as the fast stochastic is printing a reading of 97, above the overbought trigger level of 80. Medium-term momentum is 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). The MACD histogram is printing in positive territory with a declining trajectory which points to consolidation.

Homebuilding Surges to a 9-month High

Housing starts rose 1.4% to a an annual rate of 1.702 million units last month, the highest level since March. Data for November was revised slightly lower to a rate of 1.678 million units from the previously reported 1.679 million units. Housing starts totaled 1.595 million in 2021, up 15.6% from 2020. Expectations were for housing starts to fall to a rate of 1.650 million units.