Gold prices edged higher on Tuesday but continue to remain rangebound. Prices are hovering just above support levels. Solid US PMI data released on Monday has weighed on prices, while better than expected UK PMI readings helped the yellow metal gain traction. The Atlanta GDPNow model shows that the Q1 will show growth of 2.1% up from 1.7% last week.
Technical Analysis
Gold prices are hovering just above support near the March lows at 1,280. A break below this level would lead to a test of an upward sloping trend line that comes in near 1,260. Resistance on the yellow metal is seen near the 10-day moving average at 1,304. The 10-day moving average has crossed below the 50-day moving average which shows that a short-term down trend is now in place. Momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This 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 is printing in the red with a downward sloping trajectory which points to lower prices and accelerating negative momentum. The fast stochastic is pointing to consolidation. The current reading on the fast stochastic is 10, well below the oversold trigger level of 20 which could foreshadow a correction.
UK Survey Data is Steady
The UK reported construction PMI, on the heels of Monday’s manufacturing data. The construction PMI came in at 49.7 versus expectations of 49.8. On Monday the manufacturing PMI came in at 55.1 versus 51.2 expected. An inventory pileup ahead of Brexit is seen as the reason for the surge. UK Parliament rejected all the Brexit alternatives leaving the country at an impass. It was hoped that by narrowing down the alternatives in an effort to pass one of them.
This article was originally posted on FX Empire