Gold prices registered a fall after the breakout on Wednesday. The dollar continued to decline, giving rise to the yellow metal. The US Treasury yield declined after a softer than expected US PPI figure. The wholesale price inflation numbers are stronger than the consumer price index expected on Wednesday.
Gold prices eased slightly, breaking the 4-day winning streak. The price reverted to a downward sloping trend line that comes 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 negative as the Fast Stochastic generated a crossover sell 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).
PPI softer than expected
The Producer Price Index, which measures wholesale prices, was up 0.2% for the month, half the 0.4% expected. Measuring the PPI year-on-year, it came in at 9.7%, the highest increase in more than a decade. Monthly gains were a sharp drop compared to the previous two months, with gains of 1% in November and 0.6% in October. Excluding food, energy and business, core PPIs rose 0.4% for the month, down from 0.5% estimates. PPIs for both food and energy declined by 0.6% and 3.3%, respectively, during the month.