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Gold Price Prediction – Gold Edges Lower as Dollar Rallies

By:
David Becker
Published: Dec 14, 2018, 17:26 UTC

Gold prices moved lower on Friday as the dollar gained traction against the Euro. Stronger than expected US retail sales combined with a weaker than

Gold daily chart, December 14, 2018

Gold prices moved lower on Friday as the dollar gained traction against the Euro. Stronger than expected US retail sales combined with a weaker than expected flash PMI reading in the EU lead to the headwinds experienced by gold.

Technical Analysis

Gold prices continue to trade sideways but moved lower on Friday. Prices appear to have bounded just in front of support near the 20-day moving average at 1,231. Additional support is seen near the 50-day moving average at 1,224. Short term momentum is negative as the fast stochastic recently generated a crossover sell signal, which points to accelerating negative momentum. Positive momentum is decelerating as the MACD (moving average convergence divergence) histogram is printing in the black with a declining trajectory which points to decelerating positive momentum.

Retail Sales Grew More than Expected

Retail sales, rose 0.2% in November month over month $513.5 billion, slightly beating expectations, according to a Commerce Department. November sales were up 4.2% year over year, signaling a strong start to the holiday season. Excluding gasoline, sales climbed a solid 0.5% in November from a month earlier. Sales at gasoline stations fell 2.3% in November from October, reflecting falling oil prices.

Industrial production rose 0.6% in November month over month according to the Federal Reserve. This was driven by a 3.3% rise in utilities output, which is impacted by weather patterns; November’s average temperature was in the coolest third of the historical record. Industrial production increased 3.9% in November, year over year and production from U.S. factories grew 2.0%. Overall capacity utilization grew by 0.4% to 78.5% in November. Economists had expected 78.6%.

The Eurozone flash PMI’s for December were much weaker than expected.  Both the manufacturing and the services PMI for the EU fell to 51.4.  Germany was the best of the bunch coming in at 52.2 compared to expectations of 52.4. The manufacturing and services PMIs fell to 51.5 and 52.5, respectively.

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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