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Gold Price Prediction – Gold Consolidates Ahead of Mid-Term Election Results

By:
David Becker
Updated: Nov 6, 2018, 15:43 UTC

Gold prices edged higher on Tuesday but are unlikely to break out ahead of the results of the US mid-term elections.

Comex Gold

Prices will likely climb if it appears that the US senate will flip to democratic control. The market has priced in a flip of the house of representatives, which will likely lead to an updraft in riskier assets. The US reported a strong US services report which was countered on Tuesday by an upward revision in EU PMI Data.

Technical Analysis

Gold prices moved sideways but are bucking up against resistance.  A break of the October highs at 1,239 would lead to a test of the July highs at 1,265.  Support on the yellow metal is seen near the 20-day moving average at 1,225. Momentum is neutral as the MACD (moving average convergence divergence) histogram prints near the zero-index level with a flat trajectory which points to consolidation.

The US reported a robust ISM services index which popped up to 60.3 in October, above the 59.3 expected. Since services make up the bulk of the US economy, this number takes on more significance. The index jumped to 61.6 in September, which was its fastest expansion on record.

EU PMI Was Stronger than Expected

The final services and composite PMI came in stronger than expected in October with the headline reading improving to 53.1. The final services PMI improved to 53.7. Span and Germany were the drivers of the solid data while Italy and France dragged on the index. Italy’s reading fell further into contraction territory dropping to 49.2 from 49.3. This is not good for the Italian finance minister who needs stronger growth to allow for a higher budget. Italian finance minister Tria refuted reports that he was going to present a revised budget.  Italy was asked by the EU commission to deliver a revised budget to the EU by November 13.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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