Gold Price Prediction – Gold Consolidates Ahead of CPI

Gold prices attempted to move higher on Thursday following a softer than expected U.S. wholesale price report that showed inflation was combing in less than expected.  This initially eased U.S. treasuries and allowed the yellow metal to rise, but traders came in and quickly sold resistance levels, keeping gold prices range bound until Friday’s Consumer Price Report.

Technicals

Gold remains range bound caught between resistances near the August highs at $1,221, which coincide with the 10-day moving average and support which is the August lows at 1,206 and the July 2016 lows at 1,204. The market appears to be quiet, as the markets appear to be waiting for higher inflation expectations to lift yields and buoy the dollar. If there is a hotter than expected number, gold prices will head for the floor.  The sideways movement has allowed momentum to turn positive. The MACD (moving average convergence divergence) index generated a crossover buy signal. The occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The fast stochastic also generated a crossover buy signal in oversold territory and is moving higher reflecting accelerating positive momentum.

The Jobs Market Remains Tight

The labor department reported that jobless claims slipped 6k to 213kfor the week ended August 4. Data for the prior week was revised higher by 1K claims. Expectations were for a rise to 220K. Claims dropped to 208,000 during the week ended July 14, which was the lowest reading since December 1969.

Producer Prices Were Flat in July

Inflation was softer than expected according to the producer price index released on Thursday by the Labor Department. The BLS reported that PPI was unchanged for final demand which followed a 0.3% increase in June. Year over year PPI advanced 3.3%, slowing after June’s 3.4%. Expectations were for a .2% increase in July which would have generated a 3.4% year over year increase.