Gold Price Prediction – Gold Rallies as US Yields Slip

Gold prices moved higher on Thursday as trade concerns continued to weigh on riskier assets. US yields moved lower with the 10-year hitting a fresh 2-year low close at 2.23%. European yields also moved lower but not as severely which allowed the dollar to ease. This paved the way for higher gold prices. US GDP came in stronger than expected while housing starts came in softer than expected.

Technical Analysis

Gold prices rebounded and continued to move higher on Thursday rising 0.67%. Prices hit resistance near the 50-day moving average at 1,287. Support on the yellow metal is seen near the 10-day moving average at 1,280. Medium term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occur 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). Short term momentum has turned positive but the fast stochastic is whipsawing generating a new signal every day which is a sign of consolidation.

US GDP Grew More than Expected

The US economic expanded at 3.1% in the Q1, slightly better than expected. Q1 gross domestic product beat the 3% expectations but was lower than the initial 3.2% projection from the Bureau of Economic Analysis. The decrease came due to downward revisions to nonresidential fixed and private inventory investment, two key drivers to GDP.

The revised Q1 numjbers also reflect upward revisions to exports and personal consumption expenditures. Corporate profits also weakened, falling 2.8% across all companies. Inflation indicators also were weaker than expected, with core personal consumption expenditures up just 1.03%. Exports rose 4.8% amid the increasingly bitter trade war between the US and China, while imports, which are a subtraction from GDP, declined 2.5%.