Gold Prices Whipsawed Despite a Decline in the Greenback
Gold prices whipsawed but settled off the lows of the trading session despite a drop in the U.S. dollar. U.S. yields moved higher following an in-line ISM non-manufacturing report. On Thursday, the Bank of England raised its benchmark interest rate 25-basis points to 50-basis points while the European Central bank had unchanged interest rates. The dollar eased, and yields rose. All of this news comes ahead of Friday’s employment report. The ECB kept its rates at zero. The lack of action comes as increased pressure on the ECB. The 19-member region has seen inflation creep up month after month, with the most recent reading hitting a record 5.1% in January.
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Technical Analysis
Gold prices rallied whipsawed and settled off the lows of the day. Prices remain above support near the 50-day moving average at 1,802. Resistance is seen near the 10-day moving average at 1,814. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium-term momentum is negative as the MACD (moving average convergence divergence) index has generated a crossover sell signal. This situation occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram prints in negative territory with a downward sloping trajectory pointing to lower prices.
Services PMI Shows a Large Decline
The ISM services business activity index fell to 59.9 from 62.3 the prior month, signaling that the growth in incoming work slowed. Expectations were for a decline to 60. The new orders index declined slightly to 61.7 from 62.1, suggesting that demand held up well.