Gold Price Prediction – Gold Consolidates Ahead of Economic Data

The gold prices edged higher and are consolidating after rallying last week. The dollar consolidated and formed a doji day which is a sign of indecision. U.S. Treasury yields moved higher despite a softer than expected Chicago PMI report. Tomorrow the U.S. will release the ISM manufacturing report along with ADP private payrolls.

Tecnical analysis

Gold prices edged higher and are consolidating in a tight range. Resistance is seen near the August highs at  1,831. Support is seen near the 50-day moving average near 1,794. Prices are overbought as the fast stochastic is printing a reading of 85, above the overbought trigger level of 80 which could foreshadow a correction.  Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This buy signal 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).

Chicago PMI Declines More than Expected

The Chicago Purchasing Managers Index released by ISM-Chicago dropped to 66.8 in August from 73.4 in July, reflecting a decline in manufacturing activity across the heart of the mid-West. This reading came in lower than the market expectation of 68. Tomorrow, the ADP reports its private-sector job estimate.  The median expectation is for 625k after a 330k increase in July.