Gold Price Prediction – Gold Consolidates Despite Softer than Expected Jobs Data

Gold prices continued to climb but there was some profit taking as the North American session commenced. Prices rose up to resistance levels, but where turned back despite a larger than expected rise in jobless claims which weighed further on US yields. The soft data will be confirmed on Friday when the Department of Labor reports its employment report. Expectations are for jobs to increase by 165K jobs compared to the 312K increase in December.

Technical Analysis

Gold prices ran into resistance near the May 2018 highs near 1,325. A close above this level would lead to a test of the 2018 highs near 1,365. Short term support is seen near the 10-day moving average at 1,296. Additional support is seen near the 50-day moving average at 1,264. Short term momentum is decelerating. The fast stochastic generated a crossover sell signal in oversold territory which points to decelerating positive momentum. The current reading of 92, is above the over bought 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 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).

Jobless Claims Rose More than Expected

Initial claims jumped 53,000 to 253,000 for the week ended January 26, the highest level since September 2017, according to the Labor Department. The rise was also the largest since September 2017. Claims dropped to 200,000 in the prior week, which was the lowest level since October 1969. Expectations had forecast claims rising to only 215,000 in the latest week. The claims data covered the Martin Luther King holiday. While claims tend to be volatile around holidays, last week’s big jump could be flagging a moderation in job growth.