Gold Price Prediction – Gold Experience Dead Cat Bounce as US Yields Move Higher

Gold prices were nearly unchange Friday as higher US yields offset a surging Euro. Stronger than expected import prices helped US yields gain traction.  Rising US yields should eventually buoy the dollar against most major currencies and pave the way for lower gold prices. The move appears to be a dead-cat bounce after gold prices tumbled on Thursday. Prices appear to be forming a topping pattern.

Technical Analysis

Gold prices moved sideways and were not able to gain traction despite a rising euro and a dollar that was having difficulty gaining strength except against the yen. Prices were unable to push above the 10-day moving average which is short term resistance near 1,294. Additional resistance is seen near the 50-day moving averaged at 1,306. In February, March and Aprili, gold prices have made consecutive lower highs forming the topping pattern. The lows in March and April are similar, which forms a bottom that could be tested again.

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-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day 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 also generated a crossover sell signal which points to short term accelerating negative momentum.

US Import Prices Rise

U.S. import prices increased for a third straight month in March, driven by higher fuel prices. This follows a stronger than expected PPI released on Thursday and a more robust than expected CPI on Wednesday. The Labor Department reported that import prices rose 0.6% in March, boosted by increases in the costs of energy. Expectations were for import prices to rise by 0.4% in March. Data for February was revised higher to show import prices rising 1.0%, the largest monthly advance since May 2016.