Gold prices broke out closing at a fresh 7-year high as concerns about the coronavirus continued to benefit safe-haven assets. For the year that followed the outbreak of the SARs virus gold prices rallied a robust 28%. This following Thursday news from the WTO that the virus was a global emergency. Softer than expected Chicago PMI data weighed on the US dollar which helped gold prices gain traction.
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Gold prices moved higher closing at a fresh 7-year high. Support is seen near the 20-day moving averaged at 1,563. Price action remains in a cup and saucer continuation pattern. This is generally a pause that refreshes higher. Resistance is seen near the January highs at 1,611. Medium-term momentum is above to turn positive as the MACD (moving average convergence divergence) index is poised to generate a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing near the zero-index level with a flat trajectory which points to consolidation
The relative strength index (RSI) is moving higher reflecting accelerating positive momentum. Short term momentum is positive as the fast stochastic generated a crossover buy signal and continues to accelerate higher.
Chicago PMI Disappoints
Manufacturing activity in the Midwest dropped in January to the lowest level since December 2015. The Chicago Purchasing Managers Index fell to 42.9 this month from 48.9 in December. Economists expected a small dip to 48.5. All five of the major components declined, with orders backlogs and new orders leading the way.
This article was originally posted on FX Empire
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