Gold Price Prediction – Gold Rallies as the Dollar Slips Despite Robust ISM Manufacturing Report

David Becker
Comex Gold
Comex Gold

 

Gold prices moved higher on Monday following the Trump Xi meeting which weighed on yields and the US dollar. The decline in the greenback paved the way for higher gold prices.  Construction spending in the US fell for the 3rd consecutive month in October according to the Commerce Department, while ISM manufacturing increased more than expected.

Technical Analysis

Gold prices rebounded on Monday, pushing through trend line resistance and poised to test the October highs near 1,243.  Support on the yellow metal is seen near the 20-day moving average at 1,219 and then the 50-day moving average at 1,215. Momentum has 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 is printing in the black with an upward sloping trajectory which points to higher prices. The fast stochastic generated a crossover buy signal and is pointing to higher prices.

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Manufacturing Was Stronger than Expected

U.S. manufacturing activity picked up in November, according to the Institute of Supply Management. ISM’s U.S. manufacturing index rose to 59.3 in November from 57.7 in October, topping expectations for a reading of 57.6. The prices paid subindex fell to 60.7 from 71.6 which is below estimates of 70 and shows that inflation is easing. Gauges of new orders and employment rose.

Separately, The Commerce Department said total construction spending fell 0.1% to $1.31 trillion in October, compared to forecast outlays rising 0.4%. The figure rose 4.9 percent on a year-over-year basis. The Commerce Department also revised its September construction figure, previously reported as unchanged, to show a 0.1% decline. Private construction spending fell by 0.4% in October, compared to 0.4% growth a month earlier. Private residential outlays dipped 0.5% to the lowest since November 2017.

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