Gold Prices Stall as Technicals Show Prices are Overbought

Key Insights

• Gold prices eased slightly.

• The dollar rallied, putting pressure on the yellow metal.

• PPI surged more than expected.

Gold prices eased slightly on Thursday ahead of the long holiday weekend. The dollar rose as yields restarted their trend higher. The 10-year Treasury yield hit highs not seen since 2018. Strong inflation figures during the week buoyed yields. Most equity markets are closed on Friday in observance of the Good Friday holiday.

Initial jobless claims for the week ended April 9 rose to 185,000 versus 170,000 expected and a revised 167,000 during the prior week. Continuing claims for the week ended April 2 were 1.475 million versus 1.500 million expected, 1.523 million during the prior week.

Technical Analysis

Gold prices stalled and eased on Thursday. Support is seen near the 10-day moving average at 1,945. Resistance is seen near the March highs at 2070. Gold prices will need to clear the March highs for the uptrend to proceed.

Short-term momentum has turned negative as the Fast Stochastic generated a crossover sell signal. Prices are overbought. The fast stochastic is printing a reading of 90, above the overbought trigger level of 80. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) generated a crossover buy signal.

This scenario 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 an upward sloping trajectory which points to higher gold prices.

This article was originally posted on FX Empire

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