Gold Price Prediction – Gold Rallies on Soft Wholesale Inflation Report

David Becker
Comex Gold
Comex Gold

Gold prices moved higher as the dollar lost ground following a weaker than expected wholesale inflation report.  Yields edge lower as inflation does not appear to be a threat, which could reduce the chance of the Fed raising rates at their December monetary policy meeting. In its Beige Book report the Fed sees increasing labor shortages which are increasing wage inflation. The Fed also said that increasing wages are restricting sales. Traders now await the Consumer price inflation report and the Retail Sales report to determine retail inflation and growth.

Technical Analysis

Gold prices surged higher rising up to the 1,207 handle and poised to test target resistance near the 50-day moving average at 1,213.  Support is seen near the 20-day moving average at 1,197. Momentum has turned positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory which points to higher prices. The fast stochastic generated a crossover buy signal which points to accelerating positive momentum.

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US PPI Was Weak

The Labor Department of Wednesday reported that U.S. producer prices unexpectedly declined in August, recording their first drop in 18-months driven by food and energy. The Labor Department said on Wednesday its producer price index for final demand slipped 0.1% last month after being unchanged in July. August’s fall in the PPI was the first since February 2017. The August year over year increase showed that prices rose 2.8%, slowing further after July’s 3.3% increase. Economists polled had forecast the PPI increasing 0.2% in August and advancing 3.2% year-on-year. A key gauge of underlying producer price pressures that excludes food, energy and trade services edged up 0.1% last month. The so-called core PPI gained 0.3% in July. In the 12 months through August, the core PPI increased 2.9% after rising 2.8% in July.

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