Gold Price Prediction – Gold Continues to Drop Poised to Test Lower Levels

Gold prices continued to move lower as the dollar gains traction and risk aversion abates. The U.S. current account widened much to the dismay of the White House allowing the dollar to grind higher paving the way for lower gold prices. The stronger than expected mortgage index also buoyed the dollar. The yellow metal is poised to test target support near the December 2017 lows at 1,236. Resistance is seen near the 10-day moving average which is the former breakdown level at 1,289. Momentum has turned negative as the MACD (moving average convergence divergence) index recently generated a crossover sell signal. The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices. Gold prices are oversold as the fast stochastic prints a reading of 7, well below the oversold trigger level of 20, which could foreshadow a correction.

U.S. current account deficit widened

U.S. current account deficit widened $8.0 billion to -$124.1 billion in Q1, a little less than expected, after moving out to $116.12 billion in Q4 which was revised from -$128.2 billion, from Q3’s -$103.4 billion which was revised from -$101.5 billion. The goods and services deficit gapped out to -$155.6 billion versus -$147.8 billion which was revised from -$153.9 billion. The primary income surplus was $62.0 billion from $62.4 billion which was revised from $57.2 billion. The secondary income deficit was -$30.5 billion from -$31.0 billion which was revised from -$31.5 billion.

U.S. MBA mortgage market index rose

U.S. MBA mortgage market index rose 5.1% in data released earlier, accompanied by a 4.3% gain in the purchase index and a 6.1% jump in the refinancing index for the week ended June 15. The average 30-year fixed mortgage rate rose 8 basis points in the prior week ended June 8, but was drawn lower for the week ended June 15. This followed the FOMC hike and was book-ended with the BoJ status quo.