Gold Prices Ease but Finish the Week Up Strongly

Gold prices consolidated for a second consecutive trading session and finished the week up 5.7%. U.S. Treasury yields moved lower, weighing on the greenback, which helped buoy the yellow metal despite a selloff in riskier assets. Leading Economic Indicators were in line with expectations. Next week the markets will focus on the Federal Reserve meeting.

Technical Analysis

Gold prices moved lower on Friday. Support is seen near the 10-day moving average at 1,1823   Resistance is seen near the November highs at 1,877. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Prices have moved out of overbought territory below the overbought trigger level of 80, reflecting accelerating negative momentum. Medium-term momentum is positive as the MACD (moving average convergence divergence) index has generated a crossover buy signal. This situation 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 in positive territory with an upward sloping trajectory pointing to higher prices.

LEI Rises in Line with Expectations

The U.S. conference board reported that leading economic indicators rose 0.8% in December. The  Leading Economic Index now stands at 120.8, following a 0.7% increase in November. Next week the markets will focus on the Federal Reserve. The tone has been hawkish, and the markets are still pricing in a 100-basis point tightening by the end of 2022.