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Gold Price Prediction – Gold Consolidates Following Robust US Data

By:
David Becker
Published: Oct 3, 2018, 19:55 UTC

Gold prices failed to move higher and continue to trade in a tight range. The dollar continued to gain traction against most major currencies following

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Gold prices failed to move higher and continue to trade in a tight range. The dollar continued to gain traction against most major currencies following better than expected jobs and services data released in the US on Wednesday. Yields surged placing an underlying bid under the dollar, which weighed on gold prices.

Technical Analysis

Gold prices attempted to move higher but ran into resistance near a downward sloping trend line that comes in near 1,208. Support on the yellow metal is seen near the 10-day moving average at 1,196 and then an upward sloping trend line that comes in near 1,181. Momentum is positive as the MACD (moving average convergence divergence) index recently generated a crossover buy signal. This occur 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).

The Dollar is Buoyed By Strong US Data

The dollar gained traction which capped the upside for the yellow metal.  ADP reported that private companies added 230k more jobs in September which was the higher gains since February. Expectations were for the US to add 185K jobs this past month. There were strong gains in construction which grew by 34K as goods-producing industries overall contributed 46K to the final count. Job gains were spread across industries, as services led with 184,000. Manufacturing added just 7,000, its weakest reading in a year. Most of the job gains were in small to mid-size companies which added 99K jobs. Large businesses added 75,000. The August private payrolls count was revised up by 5,000.

Services Shows Robust Gains

The ISM non-manufacturing index rose to 61.6 last month. That is the highest level since the index was created in 2008. Expectations were for the index to hit 58 in September. The index jumped from 58.5 in August.

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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