Key Insights
Gold prices continued to decline as yields extended gains.
Investors placed bets on the size of upcoming rate hikes.
Treasury yields soared as equities rallied.
Gold prices declined sharply as equities and bond yields rose. Investors placed bets on more aggressive Fed rate tightening in the coming months. The dollar rallies but is off its highs as investors predict more aggressive Fed rate tightening.
Benchmark yields moved higher as investors pulled out of bonds and rotated into stocks. The ten-year yield soared by 9 basis points today.
The economic calendar is relatively light today. Fed Chair Powell’s comments about the state of the economy remain in focus. Economists take bets on the Fed’s plan for the next several rate hikes based on current economic conditions.
However, inflation will still be elevated even if the economy slows down. The latest CPI data signaled that rising inflation will still be a lingering concern in the economy. The market is pricing in 50-basis point rate hikes for June, July, and likely for September.
Technical Analysis
Gold prices face sustained weakness below the 200-day moving average of 1836.92. Downward momentum might send gold prices down towed 1800. Support is seen near the early February 2022 lows near 1811. Resistance is seen at the former support level near the 200-day moving average of 1,836.
Short-term momentum turns positive as the Fast Stochastic generated a crossover buy signal. Prices are oversold as the fast stochastic prints a reading of 9.91 below the oversold trigger level of 20.
Medium-term momentum has turned negative as the MACD generates a crossover sell signal. This occurs as the 12-day moving average minus the 26-day moving average crosses below the 9-day moving average of the MACD line.
The MACD (moving average convergence divergence) histogram has a negative trajectory that points to lower prices.
This article was originally posted on FX Empire
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Source: https://finance.yahoo.com/news/gold-price-prediction-gold-prices-220004711.html