Key Insights

  • Gold prices consolidated during the Juneteenth Holiday.

  • The dollar eased as gold traded sideways.

  • The bond, stock, and commodity markets were closed

Gold prices traded sideways. The dollar eased, but the market had little direction as both the bond and commodity futures markets were closed due to the Juneteenth Holiday. The movement of the yellow metal will be based on the dollar, which might have peaked, given the massive amount of rate hikes already built into the interest rate futures market.

Gold is quoted in dollars, and the lack of movement in the greenback led to a directionless yellow metal. The most important news last week seemed to be central bank activity.

Despite rate hikes from the Swiss National Bank and the Bank of England, The Bank of Japan bought a huge amount of Japanese government bonds last week to defend its 0.25% cap on the 10-year. The move by the BOJ was a stimulus and added $81 billion of bonds to its balance sheet.

The Swiss National Bank hiked interest rates by 50 basis points, pushing the Franc up by 2% against the greenback.

Technical Analysis

Gold prices remained below former support, which is now resistance near the 200-day moving average at 1,842. The yellow metal support is now near the May lows at 1,786.

Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal.

Medium-term momentum is flat. The  MACD (moving average convergence divergence) histogram has a decelerating trajectory pointing to consolidation.

This article was originally posted on FX Empire


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