Gold prices moved lower on Tuesday experiencing whipsaw price action. The dollar continued to rally as the move into the greenback seems to be a flight to safe-haven assets. Since gold prices are quoted in U.S. dollars, the rallying greenback is weighing on gold prices. The rally in the dollar comes despite mixed U.S. yields. A stronger than anticipated move-in Housing Starts and Building Permits failed to buoy the interest rate markets.
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Gold prices dropped moved sideways and now is squarely caught in a tight range. Support is seen near the 20-day moving average at 1,795. Resistance is seen near the 50-day moving average at 1,836. Short-term momentum has flip-flopped, turning negative as the fast stochastic generated a crossover sell signal. Medium-term momentum is decelerating. The MACD histogram is printing in positive territory with a declining trajectory which points to consolidation.
Housing Starts Rise More than Expected
U.S. homebuilding rose more than expected in June. According to the Commerce Department, Housing starts rose 6.3% to an annual rate of 1.643 million units in June. Data for May was revised down. Expectations had been for housing starts to rise to 1.59 million units. Permits for future homebuilding fell 5.1% to a rate of 1.598 million units in June. Demand for housing is being driven by low mortgage rates and migration to suburban and rural areas from cities.