Gold Prices Reversed Direction Following Wednesday's Rally

Despite a brief rebound, gold prices fell. The dollar has rebounded from yesterday's heavy losses. After the 50-basis-point rate boost, benchmark yields continued their advances. Following the FOMC meeting, the ten-year treasury yield increased to 3.09 percent.

The FOMC raised rates by 50 basis points on Wednesday, but Fed Chair Powell made it apparent that a 75-basis-point boost at the next meeting was improbable.

This resulted in a weakening of the dollar, while bond rates extended their advances. Powell indicated, however, that the primary objective is to contain inflation, which provides the dollar and yields with additional upside momentum.

Initial unemployment claims increased to 200,000 from 181,000 in the previous week. In the first quarter, productivity declined by 7.5 percent. However, a tightening labor market will maintain a high level of inflation.

Technical Evaluation

Gold prices fell in the aftermath of the Fed's announcement and are again under selling pressure due to risk-on market attitude. Near the 200-day moving average of 1,836 is support. Near the 10-day moving average eat 1,889, resistance is seen.

The 20-day moving average has fallen below the 50-day moving average, indicating the onset of a medium-term downturn.

Momentum turns negative in the short term when the Fast Stochastic generates a crossover sell signal. Prices are oversold, with the fast stochastic reading 16 points below the oversold trigger level of 20.

The MACD has generated a crossover sell signal, indicating that the medium-term momentum has become negative. This occurs when the 12-day moving average minus the 26-day moving average crosses below the MACD line's 9-day moving average.

The MACD (moving average convergence divergence) histogram displays a downward trend, indicating that prices will fall.