Gold prices broke down slicing through trend line support as the dollar moved higher along with US yields. Better than expected preliminary PMI data released by IHS Markit on Monday, help buoy US yields and the greenback which paved the way for lower gold prices. Gold has also been negatively correlated to riskier assets like stocks recently.
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Gold prices broke down on Monday pushing through trend line support near 1,860 which is now seen as resistance. Additional resistance is seen near the 10-day moving average at 1,872. Support is seen near the June lows at 1,697. Short-term momentum has turned negative recently as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 12, well below the oversold trigger level of 20, which could foreshadow a correction. Medium-term momentum remains negative as the MACD (moving average convergence divergence) histogram prints in the red with a declining trajectory which points to lower prices.
PMIs Edge HIgher
Manufacturing Purchasing Managers’ Index edged higher to 56.7 in November from 53.4 in October to according to IHS Market. The expectation had been for the PMI to show a preliminary reading of 53. Furthermore, the Services PMI rose to 57.7 from 56.9 and surpassed the analysts’ estimate of 55.3.
This article was originally posted on FX Empire