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Gold prices tumbled on Thursday, notching up its second consecutive day of a large loss. The dollar moved higher, breaking out in the wake of the Fed’s monetary policy comments. The hawkish tone set by Fed Chair Jerome Powell flattened the yield curve as 2-year yields continued to rise, but 10-year yields declined. This movement in the curve is generally a sign of a recession. U.S. Gross Domestic Product rose by 6.9% year over year more than expected.
Gold prices tumbled on Thursday in the wake of the Fed meeting. Support is seen near an upward sloping trend line seen near 1,769. Resistance is seen near the 200-day moving average at 1,805. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium-term momentum is negative as the MACD (moving average convergence divergence) index has generated a crossover sell signal. This situation 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 prints in negative territory with a downward sloping trajectory pointing to lower prices.
GDP Rise More than Expected
According to the Commerce Department, Q4 Gross Domestic Product increased 6.9% year over year. Expectations were for GDP to rise 5.5%. Compared to a disappointing Q3 rebound in growth, the rise in GDP saw output in the U.S. increase by 2.3% annually. The Commerce Department also reported that personal consumption rose 3.3% compared to 3.4% expected and 2% in Q3. Core personal consumption expenditures, quarter-over-quarter, which measures price increases, rose 4.9% versus 4.9% expected, 4.6% in Q3.
This article was originally posted on FX Empire