Gold Price Prediction – Gold Consolidates Despite Uptick in Japanese Inflation

Gold ends the week in the red
David Becker
Comex Gold

Gold prices consolidated a traded sideways on Friday. While Asian markets were open, European, Australian and North American markets were closed for Good Friday.  Many markets are also closed on Monday. Japan reported that headline inflation ticked up slightly but this failed to be a significant markets mover. Riskier assets finished the week on a positive note, with Asian shares moving higher. The dollar lost some ground, despite a stronger than anticipated retail sales report, released on Thursday by the US Commerse Department.

Technical Analysis

Gold prices finished the week on a sour note. Prices declined 1.17% for the week, slicing through support near an upward sloping trend line at 1,284. Target support on the yellow metal is seen near the 50-week moving average at 1,257, which coincides with an upward sloping trend line. Weekly 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-week moving average minus the 26-week moving average) crosses below the MACD signal line (the 9-week moving average of the MACD line). The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices and accelerating negative momentum. The fast stochastic continued to head south. The current reading on the weekly fast stochastic is 16, which is below the oversold trigger level of 20, and could foreshadow a correction.

Japanese CPI Came in as Expected

Japan reported March national Consumer Prices.  Headline inflation picked up to 0.5% year over year from 0.2% in February, which was in line with expectations.  CPI Ex-fresh food edged higher comin in at 0.8% year over year.  Inflation remains low and below the central banks 2% target.  BOJ next meets April 25, and sources say that the central bank will forecast inflation of 1.5-2.0%.

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