Gold Prices Drop as Yields Surge Ahead of the Fed

Key Insights

• Gold Prices Dropped
• The Dollar was largely stronger
• U.S. Treasury yields broke out ahead of the Fed

Gold prices moved lower on Monday. Despite a continued war and no end in sight, prices moved lower as riskier assets initially gained traction.

Inflation took center stage last week and the Fed is on deck. Expectations are for the Fed to increase rates by 25 basis points on Wednesday. The market seems to be bracing for nearly 5-hikes in interest by the end of 2022.

Technical Analysis

Gold prices dropped sharply on Monday. Prices broke through support is near the 10-day moving average, which is now resistance at $1,976. Additional resistance is seen near the March highs at $2,070. Support is seen near the former breakout level at 1,916. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal.

The medium-term momentum is positive as the histogram prints positively with the MACD (moving average convergence divergence). The trajectory of the MACD histogram flattening, which likely points to consolidation.