Gold Price Prediction – Gold Breaks Out as the US Government is Poised for a Shutdown

Gold prices surged as yields continued to decline and the dollar lost ground paving the way for higher gold prices.  Gold was buoyed after news that President Trump would not sign a stop gapped spending bill that would allow the government to continue to operate until February of 2019. The President wants money for his wall, and appears to be in a faceoff with congress. Jobless claims increased by 8,000 jobs in the latest week while Philadelphia manufacturing dropped more than expected.

Technical Analysis

Gold prices surged on Thursday rising to resistance near the July 2018 highs at 1,265. Support on the yellow metal is seen near the 20-day moving average at 1,236. Momentum has turned positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory which points to higher prices. The fast stochastic is also rising reflecting accelerating positive momentum, but the current reading is printing near 86, above the overbought trigger level of 80 which could foreshadow a correction.

Jobless Claims Dropped

Initial jobless claims increased 8,000 to 214,000 for the week ended Dec. 15, according to the Labor Department. Claims had dropped to 206,000 in the prior week, close to the 202,000 reached in mid-September, which was the lowest level since December 1969. Economists had forecast claims increasing to 216,000 in the latest week. The four-week moving average of initial claims, fell 2,750 to 222,000 last week.

Manufacturing Dropped in Philadelphia

The Philadelphia Federal Reserve reported that business conditions index fell to a reading of 9.4 in December. That was the lowest level since August 2016 and followed a reading of 12.9 in November. Manufacturing had been on an upswing despite thoughts that economic conditions where on the decline and this is the first of a number of manufacturing reports that are forward looking that might show the US economy is beginning to falter.