Gold prices broke a streak of 9-consecutive higher closes, declining slightly following the larger than expected decline in US GDP. The dollar index continued to decline, as US yields moved lower, with the 10-year yield closing below 55-basis points. The recent downward trend in the US dollar is likely to buoy the yellow metal
Gold prices eased on Thursday after rising for 9-consecutive days. Prices are poised to close at a new monthly all-time high breaking out. The last time this occurred in 2008, gold prices more than doubled rising from $700 per ounce to $1921 per ounce 4-years later. This would target more than 5,200 on gold. Support is seen near the breakout level at $1,921 and then the 10-day moving average at $1895. Short-term momentum has turned negative as the fast stochastic recently generated a crossover sell signal. The RSI has also turned over and is printing a reading of 80, above the overbought trigger level of 70 which could foreshadow a correction.
Q2 GDP Contracts Sharply
Second-quarter GDP plunged the most in history contracting by 32.9% on a year over year basis according to the Commerce Department’s first reading on US growth. Economists had been looking for a drop of 34.7%, which means that despite the decline it was better than expected. With Q1 growth down 5% this number officially put the US economy in a recession. This news is not good for the incumbent President. No president in modern history has won reelection while there was a recession.
This article was originally posted on FX Empire