Selling the Jump in Gold After the Softening in CB US Consumer Confidence
Gold has jumped more than $20 as CB consumer confidence slows, but the 50 SMA is still acting as resistance
Gold has followed its seasonal pattern in recent months, rising in December and January before fading in early February and then reversing back down. The recent trend can be attributed to both seasonality and fundamental factors, such as a more hawkish FED and higher bond yields.
However, what’s notable about Gold lately is its resilience on bad days and strength on good days. Today’s price action has been a good example of that, as Gold has been surging in the last few hours after the release of the US CB consumer confidence report, which softened this month. The daily candlestick looks like a bullish engulfing day, which should be watched closely. Although, to confirm this bullish signal GOLD would need to push above $1827 (Friday’s high).
One factor that could be supporting gold prices is increased sovereign demand, particularly from China and Russia. Other countries that are unfriendly towards the US may also be turning to gold following the confiscation of Russian reserves. However, these flows are competing against the higher yields offered by bonds, which have become more attractive than they were in the 2010s.
From a technical perspective, the seasonal trend in March is typically poor (the worst month for Gold). Besides that, the 50 SMA (yellow) has been acting as resistance since the middle of this month and right now the price has stalled its advance higher just below this moving average. So, we decided to open a sell Gold signal at this moving average and are hoping that the bearish trend continues. below is the Conference Board consumer confidence report:
The US Consumer Survey from The Conference Board
- February Conference Board consumer confidence 102.9 points vs 108.5 expected
- January CB consumer confidence was 107.1 points
- Present situation index 151.1 vs 150.9 prior
- Expectations index 69.7 vs 77.8 prior (revised to 76.0)
- 1 year inflation 6.3% vs 6.8% prior (revised to 6.7%)
- Jobs hard-to-get 10.5 vs 11.3 prior (revised to 11.1)
- 13.4% of consumers expect their incomes to increase, down from 17.4% last month
Gold XAU Live Chart
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