Gold Price Prediction – Gold Rises on Subdued CPI Reading

Gold prices moved higher on Friday, making a higher high but unable to pierce through resistance. Softer than expected US CPI weighed on the dollar paving the way for higher gold prices. Additionally, the Trump Administration increased tariffs on 200-billion worth of Chinese imports into the US, raising market volatility and helping to buoy the price of the yellow metal.

Technical Analysis

Gold prices move higher but were unable to push through resistance near the 50-day moving average at 1,291. Support on gold is seen near the 10-day moving average at 1,280. Short term momentum on gold prices is about to turn negative as the fast stochastic is poised to generate a crossover sell signal. The current reading on the fast stochastic is 68, which is on the upper end of the neutral range and reflects consolidation.  Medium term momentum is positive as the MACD (moving average convergence divergence) histogram is printing in the black with a rising trajectory which points to higher prices.

Inflation is Subued

The consumer prices index rose on Friday by 0.3% according to the Labor Department. The rise was driven by gasoline, rents and healthcare costs. This follows a 0.4% increase in March. The CPI increased 2% year over year after rising 1.9% in March. Expectations had been for CPI to rise by 0.4% in April and climb 2.1% year over year.

Core inflation which excludes food and energy increased by 0.1% month over month and 2.1% year over year. Core CPI increased by 2.0% year over year in March.  Gasoline prices were one of the drivers rising 5.7% in April after rising 6.5% in March. This was offset by a dip in food prices which declined 0.1% in April after gaining 0.3% in March. Rent increased 0.3% in April, which is measured by owners equivalent for a primary residence.