Gold Price Prediction – Gold Rallies as Confidence Drops

Gold prices rebounded on Thursday, as riskier assets sold off following Wednesday’s rally. The Dollar eases as US yields slid back down to the 2.75% mark for the 10-year after rallying up to 2.80% on Wednesday. A weaker dollar paved the way for higher gold prices. US consumer confidence tumbled on Thursday as investors started to pull back their spending as the markets moved lower.  Other US government reports are on hold for now as the US partial government shutdown has temporarily eliminated the reporting of these crucial gauges of the economy.

Technical Analysis

Gold prices rebounded on Thursday after whipsawing on Wednesday as riskier assets rallied.  Prices are poised to test resistance near the December highs at 1,279. Additional resistance is seen near the June 2018 highs at 1,303. Support on the yellow metal is seen near the 20-day moving average at 1,245. Additional support is seen near the 50-day moving average at 1,233. Momentum is positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory which points to higher prices. Prices are overbought. The fast stochastic is printing a reading of 87, which is above the overbought trigger level of 80 and could foreshadow a correction.

Consumer Confidence is Weaker than Expected

Consumer confidence fell more than expected on Thursday as consumers began to feel the pinch of declining stock prices. The Conference Board, reported Thursday that its consumer confidence index fell to 128.1 in December, down from 136.4 in November and lowest since July. The index measures consumers’ assessment of current economic conditions and their outlook for the next six months. Both fell in December. Consumers’ expectations for the future dropped to the lowest level since November 2016. With the US government partially shut and stock prices declining, consumers are likely to pull back further in January.