Gold breaks above trend line resistance after strong CPI

There was a rise in gold prices by breaking the trend line resistance. The dollar went down sharply, giving rise to the yellow metal. US Treasury yields were mixed as the 2-year yield continued to rise and the 10-year yield remained low. Consumer prices were broadly in line with expectations. The Fed Beige Book was released in the afternoon. Consumer spending grew at a modest pace. Optimism is high, but growth hopes have cooled. There has been a slight increase in employment in recent weeks.

technical analysis

Gold prices rose for the fourth consecutive trading session. Price broke above resistance, which is now supported near a descending trend line that is near $1,823. Additional support is seen near the 200-day SMA near 1,800. Resistance is being seen near the January high of 1,831. Short term momentum has turned positive as Fast Stochastic has generated a crossover buy signal. Medium term momentum has turned positive as MACD (Moving Average Convergence Divergence) index generated a crossover buy signal. This situation occurs when the MACD line (12-day moving average minus 26-day moving average) crosses above the MACD signal line (9-day moving average of the MACD line).

CPI at 50-year high

On Wednesday, the US Department of Labor released its Consumer Price Index. Headline inflation at the consumer level was 7% year over year, in line with expectations. These figures were the highest level of inflation since 1982. On a monthly basis, the CPI rose 0.5%. The CPI was expected to grow 7% on an annualized basis and 0.4% from November.

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