Gold prices moved higher reversing Monday decline, initially testing support levels before rebounding during most of the trading session. The move in the yellow metal comes despite a rally in the dollar following a larger than expected fall in the US trade deficit. Geopolitics continues to keep a bid under gold prices, as Iran continues to threaten retaliation after the Trump administration killed Irans top general.
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Gold prices rallied nearly 0.5% on Tuesday after testing support near the former breakout level at 1,556 early in the trading session. Target resistance is now seen near the October 2012 highs at 1,795. Additional short term support is seen near the 10-day moving average at 1,525. The 10-day moving average recently crossed above the 50-day moving average which shows that a short term up trend is now in place. The daily RSI (relative strength index) is now printing a reading of 86, rising from 85 which reflects accelerating positive momentum. This nearly equals the high print on the RSI of 87 in 2019. The RSI is above the overbought trigger level of 70, and also points to a potential future correction. Very short term momentum is neutral as the fast stochastic consolidates after generating a crossover sell signal in overbought territory. The current reading of 87, is above the overbought trigger level of 80 which could foreshadow a correction.
Trade Deficit Narrows More than Expected
The US trade deficit fell more than expected in November. The shortfall in goods and services declined to $43.09 billion for the month, below the $43.6 estimate. That represented the lowest deficit since October 2016. That was down sharply from $46.9 billion in October, which was revised lower from an initially reported $47.2 billion. The deficit with China decreased $2.2 billion in November to $25.6 billion owing to a $1.4 billion increase in exports and an $800 million decline in imports.
This article was originally posted on FX Empire
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