Gold prices continue to rally on Wednesday, trending higher and about to test the resistance of the target. Gold prices rose as the dollar consolidated and fell and US yields stabilized. The weaker dollar has helped support commodity prices, which are rising in base metals, as well as in agriculture. Demand for mortgages increased as rates at the long end of the interest rate curve fell.
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Gold prices rose on Wednesday with prices heading towards resistance near a 38.2% Fibonacci retracement level, which is seen near 1828. T. Target resistance on the yellow metal is seen near the February highs at 1,855. Support is seen near the 10-day moving average at 1759. The 10-day moving average has exceeded the 50-day moving average, meaning an uptrend at short term is now in place. The short term momentum reversed and turned negative as the Rapid Stochastic generated a cross sell signal. The current reading on the Fast Stochastic is 89, above the overbought trigger level of 80. Medium term momentum turned positive as the MACD (Moving Average Convergence Divergence) index generated a signal of cross buy. The MACD histogram prints in positive territory with a decreasing trajectory that indicates consolidation.
Increase in mortgage demand
Demand for mortgages surged as a sharp drop in mortgage interest rates sent homeowners and potential buyers back to their mortgage lenders. According to the Mortgage Bankers Association’s seasonally adjusted index, total mortgage application volume jumped 8.6% week over week. This is the first overall increase in weekly requests since the end of February. The average contract interest rate for 30-year fixed rate mortgages fell from 3.27% to 3.20%. Home loan refinancing requests jumped 10% week after week, but were still 23% lower than a year ago.