Gold Price Prediction – Gold prices Rebound Following Strong European Inflation Figures

Gold prices moved higher on Friday, as the dollar eased and yields whipsawed in the wake of the US employment report. The better than expected results initially pushed yields higher which buoyed the dollar. Stronger than expected European inflation, which ticked up to 1.7% yer over year in March, helped buoy the Euro. helped the Euro move higher which paved the way for higher gold prices.

Technical Analysis

Gold prices moved higher on Friday, bouncing ahead of trend line support that comes in near 1,265.  Prices made a higher high and a higher close, but continue to trade sideways. Prices were able to close through short term resistance which is now supports near the 10-day moving average at 1,277. Additional resistdance is seen near the 50-day moving average at 1,296. Short term momentum is positive as the fast stochastic generated a crossover buy signal. Medium term momentum has also turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs 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 MACD histogram also generated a buy signal, but the trajectory of the MACD signal line is flat which reflects consolidation.

European Inflation  Came in Stronger than Expected

European April headline inflation came in stronger than expected. CPI increased to 1.7% from 1.4% in March, which was more than expected.  The core rate, which excludes food and energy, increased to 1.2% from 0.8%. Expectations were for the core to only rise to 1%.  Despite the stronger than expected inflation numbers, the Euro initially lost ground. Following the stronger than expected US jobs number, the Euro began to rally, which helped buoy gold prices.