Gold Prices Slip Lower and Remains Below Prior Trading Range

Gold prices moved lower on Monday giving back some of the gains experienced at the tail end of last week.  Prices ran into resistance which is the bottom of the prior range and eased back to support near the 10-day moving average at 1,294. Momentum is positive as neutral as the MACD (moving average convergence divergence) index recently generated a crossover buy signal, but the MACD histogram has a flat trajectory which reflects consolidation. With the Fed likely to continue to normalize interest rates despite chaos ensuing in Europe, gold prices will remain volatile.

Fed’s Kaplan said normalizing rates gradually is appropriate

Fed’s Kaplan said normalizing rates gradually is appropriate since the Fed wants to be attuned to the possibility that financial trends can change quickly. Fed’s Bostic said there are a host of reasons for doing so, not the least of which is that this is what the Fed has told people will do. Kaplan feels the Fed should make room for debating the Fed’s current policy framework on a regular basis. He again noted the potential adjustment to IOER, which would be done as a reaction to market dynamics and to help set the funds rate more toward the middle of the policy band. The comments are coming out of a panel discussion from the Dallas/Atlanta Fed conference on technology disruption and labor.

ECB’s Villeroy stresses the need for a common backstop in resolution fund

ECB’s Villeroy stresses the need for a common backstop in resolution fund. The Bank of France Governor said during a news conference that a backstop is needed fast. He didn’t mention recent political events that have to send jitters through Eurozone markets, but with the ECB preparing the end of net asset purchases, the financial jitters for many highlights the need for more risk sharing and a joint backstop.

Italian assets rally despite political chaos

Italian assets rally despite the political chaos. The populist coalition’s attempt to form a government failed as President Mattarella rejected the euro-skeptic candidate as finance minister. Market’s have welcomed the decision, while the anti-establishment parties are attacking Mattarella amid speculation that events were partly engineered by La Lega, which hopes to strengthen its position in new elections. Mattarella meanwhile is reported to meet with former IMF official Cottarelli to ask him to form a technical government that can lead Italy until early elections.