Gold Price Prediction – Gold prices rally on a weaker dollar and softer yields 

Key Insights

• Gold prices traded higher on investors’ concerns over slower global growth. 
• ADP Private Payrolls came in worse than expected. 
• Treasury yields dipped on dollar weakness. 

Gold prices continue to rise as jobs data indicated that the economy is headed for a slowdown. traded flat today amid rising yields and the stronger dollar. Slower growth and the Fed’s promise to fight inflation undermine gold prices and boost the dollar.

The dollar eased amid risk-on sentiment among investors, causing them to rotate into riskier assets and currencies. 

Benchmark yields dropped ahead of the unemployment report and nonfarm payroll data released tomorrow. The ten-year yield moved slid by 2.7 basis points to 2.904%. 

The ADP Private Payroll Report stated that private payrolls rose by 128.000 in May. This reading marks the slowest growth during the pandemic recovery, signaling fears of slowing economic growth.

The Dow Jones estimate for private payrolls was 299,000, which was significantly higher than the actual number. Small businesses performed the worst this month, lowering payrolls by 91,000.

US jobless claims fell by 11,000 to 200,000 from the previous week. The labor market remains intact and tight as labor supply has matched labor demand. However, demand for labor, which consists of job openings, may ease as the Fed continues to aggressively tighten interest rates.

This data comes before tomorrow’s key readings including non-farm payrolls and the unemployment report, which is estimated to come in at 3.5% and will provide insight into the US economic condition. 

Technical Analysis

Gold prices surge and are headed toward the 50-day moving average near 1894. Despite this, this gold faces a bearish bias as Fed rate hikes underpin a stronger dollar, which will cause gold prices to decrease. 

Support is seen near the 10-day moving average of 1853. Resistance is seen near the 200-day moving average of 1894. 

Short-term momentum turns positive as the Fast Stochastic generated a crossover buy signal. Prices are neither overbought nor oversold as the fast stochastic prints a reading of 96.13, well above the overbought trigger level of 80. 

Medium-term momentum turns positive as the MACD generated a crossover buy signal. This occurs as the 12-day moving average minus the 26-day moving average crosses below the 9-day moving average of the MACD line.

The  MACD (moving average convergence divergence) histogram has a negative trajectory that points to lower prices.