Gold Price Prediction – Gold Consolidates Despite Robust Jobs Data

Gold remains rangebound as headwinds and tailwinds offset each other
David Becker
Comex Gold

Gold prices continued to move sideways, as riskier assets continued to trade under pressure. Gold is gaining tailwinds as US yields decline, but a solid dollar continues to weigh on prices. Stronger than expected US jobless claims also weighed on gold prices.

Technical Analysis

Gold prices traded sideways, holding in just above support near an upward sloping trend line that comes in near 1,270. A break below this level would lead to a test of the May lows at 1,266. A close below the May low could lead to a downdraft and a test of the December 2018 lows at 1,233. Resistance is seen near the 10-day moving average at 1,284, and then the 50-day moving average at 1,290. Medium term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices. The fast stochastic continues to move lower reflecting accelerating short term negative momentum. The current reading on the fast stochastic is 22, just above the oversold trigger level of 20.

Jobless Claims Were Stronger than Expected

US jobless claims came in stronger than expected according to the Department of Labor. Initial claims  slipped 1,000 211,000 for the week ended May 18. Expectations were for claims would rise to 215,000 in the latest week. The Labor Department said no states were estimated last week. The four-week moving average of initial claims, dropped 4,750 to 220,250 last week. Continuing strength in labor market conditions is seen supporting growth amid signs that economic activity is slowing.

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