Gold Price Prediction – Gold Remains Range-bound Despite Surge in US Yields

David Becker
Gold daily chart, October 05, 2018

Gold prices edged higher on Friday but continue to remain rangebound following the US jobs report which was softer than expected.  Traders seemed to focus on the revisions and which showed robust upward gains, but used the release as a catalyst to take profits on riskier assets. The dollar whipsawed but moved nowhere. US yields soared despite wage gains that were in line with expectations.

Technical Analysis

Gold prices moved higher rising up to trend line resistance that comes in near 1,209.  Support on the yellow metal is seen near the 10-day moving average near 1,196. Additional support is seen near an upward sloping trend line that comes in near 1,182. Short-term 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 a rising trajectory which points to higher prices.

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Payrolls Where Weaker than Expected

The unemployment rate unexpectedly declined September to 3.7%, the lowest since 1969, according to the US Department of Labor. The household survey was not matched by the softer than expected payroll report. This shows that US employers added 134,000 positions to payrolls. While the jobs added last month were fewer than the 185K expected, investors attributed the decline in hiring to widespread flooding in North and South Carolina caused by Hurricane Florence.

Wages rose at a 2.8% pace in September from the previous year, following a 2.9% year-over-year increase in August. Expectations were for an increase to 2.9% year over year.  Wages haven’t increased at better than a 3% rate from a year earlier since the recession ended in 2009.  The number was strong enough to lift the 10-year yield to 3.25%.

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