Gold Price Prediction – Gold Rebounds Despite Rise in the Greenback

Gold prices rose in Friday rebounded following Thursday drop. Prices where under pressure earlier in the week following the federal reserves decision to increase interest rates.  The dollar continued to rise against most major currencies but gold experience a bounce despite the strength in the greenback. US yields moved lower on Friday, but the interest rate differential continued to point to a stronger dollar.

Technical Analysis

Gold prices moved higher on Friday but finished the week under water.  Prices rebounded but made a lower low and a lower high which is a sign of a downtrend. Resistance is seen near the 10-day moving average at 1,197. Support is seen near the August lows at 1,160. Momentum remains negative as the MACD (moving average convergence divergence) histogram prints in the red with a downward sloping trajectory which points to lower prices.

The Fed’s Favorite Gauge of Inflation Continues to Grind Higher

The Commerce Department on Friday released personal consumption and spending figures which also describes the Fed’s favorite gauge of inflation. The personal-consumption-expenditures price index was up 0.1% month over month and 2.2% year over year, driven by a sharp rise in oil prices earlier this year. The core PCE price index, which excludes food and energy prices, was unchanged in August month over month but rose 2% year over year. Expectations had called for core PCE prices to rise 0.1% in August from July and 1.9% from a year earlier.

The Commerce Department reported that consumer spending, rose 0.3% month over month after an unrevised 0.4% gain in July. Spending last month was driven by outlays on healthcare, which offset a drop in motor vehicle purchases. August’s increase in consumer spending was in line with economists’ expectations. Adjusted for inflation consumer spending, which accounts for 66% of US GDP increased by 0.2% August after climbing 0.3 percent in July.