Gold prices rebounded sharply on Thursday ahead of the long holiday weekend. The doll moved higher, and U.S. yield declined as unemployment claims unexpectedly rose. Initial jobless claims were higher than expected last week, with 719,000 more workers heading to the unemployment line. The total compared with the 675,000 estimates. Continuing jobless claims, which run a week behind the headline number, fell by 46,000 to just below 3.8 million.
Gold prices rebounded sharply following Wednesday’s reversal day. Prices pushed through short term resistance which is now support near the 20-day moving average at 1,723. Additional support is seen near the June lows at 1,670. Resistance is seen near the 50-day moving average at 1,772. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line. The MACD histogram is printing in positive territory with an upward sloping trajectory which points to higher prices.
Manufacturing Activity Surges
The U.S. ISM manufacturing activity index soared to its highest level in more than 37 years in March, driven by strong growth in new orders, the clearest sign yet that a much anticipated economic boom was probably underway. The Institute for Supply Management (ISM) reported that its index of national factory activity jumped to a reading of 64.7 last month from 60.8 in February. That was the highest level since December 1983. Economists had forecast the index rising to 61.3 in March. The ISM survey’s measure of prices paid by manufacturers last month hovered near its highest since July 2008. Its forward-looking new orders sub-index jumped to 68.0 in March. That was the highest reading since January 2004 and was up from 64.8 in February.