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Gold Price Prediction – Gold Rebounds Following Robust GDP Data

David Becker
Comex Gold
Comex Gold

Gold prices moved higher on as the dollar continued to lose ground and riskier asset became more attractive.  A stronger than expected revision to Q2 GDP also showed that inflation expectations remain subdued.  GDP continues to print higher than 4%, which has kept US treasury yield buoyed which has capped further increases in gold prices.

Technical Analysis

Gold prices moved higher on Wednesday, bouncing near support at the 10-day moving average at 1,199.  Resistance on the yellow metal is seen near the August highs at 1,214. The 10-day moving average is poised to cross above the 20-day moving average which shows that a short-term uptrend is now in place. Momentum is positive as the MACD (moving average convergence divergence) histogram is printing in the black with an upward sloping trajectory which points to higher prices. The only caveat is that the fast stochastic has surged higher and is currently printing a reading of 80, which equal the oversold trigger level and could foreshadow a correction.

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US GDP Was Revised Higher

US Gross Domestic Product Rose by 4.2% from 4.1% according to date released on Wednesday by the US Commerce Department. The increase in growth was the fastest rate experienced in the US since the Q3 of 2014. The increase was driven by an uptick in business spending for technology.  In addition, the US imported less oil that previously reported.  Output increased to 3.2% in the Q2 as opposed to the previously reported 3.1%. The underlying driver of growth was the tax cuts introduced at the beginning of 2018. While this fiscal stimulus is strong, it is partially offset by rising interest rates. The trade goods deficit increased by 6.3% in July.  This shows that the US is spending more than it is receiving which is helping to widen the deficit. The stronger GDP figures slightly altered the stock and bond markets but helped buoy the oil markets.

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