Gold prices continued to rally climbing 0.5% as the dollar retreated and US yields were mixed. Strong gains in Chinese equities spilled over into US stocks which paved the way for higher gold prices. Stronger than expected US ISM services numbers helped add to riskier assets, which have been highly correlated gold, helping to buoy the yellow metal.
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Gold prices rallied on Monday following a long holiday weekend. Prices closed at a fresh 8-year high and are poised to test resistance is seen near the August 2012 highs at 1,791. Support is seen near the 10-day moving average at 1,772 and additional support is seen near the 50-day moving average at 1,730. Short term momentum continues to whipsaw moving back into positive territory generating a crossover buy signal after generating a crossover sell signal on Thursday. The current reading on the fast stochastic is 86, above the overbought trigger level of 80 which could foreshadow a correction. Medium-term momentum remains positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory which points to higher prices.
US ISM Services Beats Expectations
The ISM services PMI for June climbed to 57.1, up 11.7 points from the May reading of 45.4, surpassing the neutral for the first time since the pandemic hit the U.S. This is the largest single-month increase in the index since its debut in 1997. Expectations were for the PMI to come in at 50.1. The business activity index registered 66, up 25 percentage points from May’s figure of 41. New orders stood at 61.6, up 19.7 percentage points compared with the prior month. The employment index, despite increasing by 11.3 percentage points, remained in contraction territory at 43.1.
This article was originally posted on FX Empire
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