Gold Price Prediction – Gold Rises Following Soft US Services Data

Gold prices moved higher on Thursday in the wake of the ISM services report which put downward pressure on US yields and weighed on the dollar. It appears the US is catching the global economic cold. The ISM survey for manufacturing earlier this week moved into contraction, but expectations were for the services industry, which makes up the bulk of US growth, would remain strong. Final EU services PMI services also dipped but the compositive was revised higher.

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Technical Analysis

Gold prices rallied 0.4% on Thursday but settled well off session highs. Prices tested resistance early pushing to resistance seen near a downward sloping trend line near 1,524. Prices are hovering just above short term support near the 10-day moving average at 1,503. Short term momentum has turned positive fast stochastic generated a crossover buy signal in the middle of the neutral range. Medium-term momentum is beginning to consolidate. The MACD histogram is printing in the red with a flattening trajectory which points to consolidation.

Markit reported that final eurozone services PMI for September.  Headline services PMI came in at 51.6 versus 52.0 expected.  Manufacturing fell into contraction territory.  Germany and France composite PMIs both worsened from the flash readings to 48.5 and 50.8, respectively.  Spain composite fell to 51.7, while Italy rose slightly to 50.6.

Separately, the US ISM services came in at 52.6, compared with an expected reading of 55.3. It was the weakest reading since August 2016. New orders plunged to 53.7, 6.6 points lower than the August reading, while employment slipped from 53.1 to 50.4, its worst February 2014. Prices increased to 60 from 58.2. ISM Manufacturing Index for September reading was 47.8, its worst showing since June 2009.