Gold prices moved higher on Wednesday, finding support at an upward sloping trend line. This came as the dollar edged higher and US yields edged lower. Riskier assets saw an uptick in volatility which helped the yellow metal gain traction. Mortgage rates continued to remain at levels that are attracting new buyers. Mortgage applications to purchase a home rose 9% last week on a week over week basis.
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Gold prices moved higher just holding support but continuing to remain rangebound. Target support is still an upward sloping trend line that comes in near $1,693. Below that level is support near the 50-day moving average at $1,675. Resistance is seen near the 5-day moving average at $1,723. Short-term momentum has turned negative as the fast stochastic recently generated a crossover sell signal in overbought territory. Medium-term momentum has also turned negative as the MACD (moving average convergence divergence) index recently 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 has also generated a crossover sell signal. The histogram is printing in the red with a declining trajectory which points to lower prices.
Mortgage Applications Rise
Mortgage applications rose 9% last week from the previous week according to the Mortgage Bankers Association’s index. It was the sixth straight week of gains and a 54% recovery since early April. The 30-year fixed-rate mortgage has dropped 75-basis points since January. Homebuyers are getting a great deal over 30-years, The gains mirror an unexpectedly strong sales pace just reported for newly built homes in April. They were forecast to fall by 22% but instead rose nearly 1% for the month.
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This article was originally posted on FX Empire
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