Gold prices edged lower on Wednesday initially moving higher during the European trading session but edgeing lower as tensions over trade between US and China eased. Riskier assets gained traction taking away some of the safe-haven appeals of gold. US retail sales were weaker than expected, generating headwinds for the dollar which kept gold prices buoyed.

Technical Analysis

Gold prices were nearly unchanged forming a doji day which is a sign of indecision. Prices held above support which is a downward sloping trend line which formed the breakout on Monday. This comes in just above the 50-day moving average at 1,291. Additional Support is seen near the 10-day moving average at 1,285. Momentum is easing and turning neutral as the MACD (moving average convergence divergence) histogram is printing in the black with a flattening trajectory which points to consolidation. The faste stochastic appears to be reaching a peak, which is also a sign of consolidation. The current reading on the fast stochastic is 85, above the overbought trigger level of 80, which could foreshadow a correction.

Retail Sales Slide More than Expected

The US Commerce Department reported on Wednesday that US retail sales declined 0.2% in April, following a surge of 1.7% in March. The March figure was revised down slightly. Contractions in spending on clothing and applications reduced overall spending. Car sales dropped 1.1% last month and sales at electronics and appliance stores dropped 1.3%. Retail Sales are a key component of consumer spending which makes up 66% of US GDP.

Sales at clothing stores fell 0.2% and plunged 1.9% at home and garden supply stores. Furniture store sales were unchanged. Even the category that includes online retailers dropped. Excluding the volatile auto and gas categories, retail sales also fell 0.2%.

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