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Gold Price Prediction – Gold Rolls Over Following Robust Payroll Report

David Becker
Comex Gold
Comex Gold

Gold prices moved lower on Wednesday, as the dollar gained traction following a stronger than expected US private payroll report. Traders will now be watching Thursday’s PMI data which will be released in the US, Europe and the UK to get a gauge of where prices are going. The Chicago PMI which is a gauge of mid-west manufacturing, dropped in October but remains at elevated levels.

Technical Analysis

Gold prices dropped on Wednesday, and slipped through short-term support near the 10-day moving average at 1,217 which is now seen as short-term resistance.  Additional support is seen near the 50-day moving average at 1,206.  Momentum on the yellow metal has turned negative 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 below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices. The fast stochastic continues to move lower reflecting accelerating negative momentum.

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ADP Private Payrolls Rose More than Expected

Private employment surged in October according to ADP and Moody’s analytics. According to ADP private payrolls increased by 227k jobs. Expectations were that private jobs would increase by 189K.  The September figures were refined lower by 12K jobs dropping to 218K from 230K. Gains came primarily from the services sector, which added 189k positions. Construction and manufacturing added 17k each. Transportation and utilities was the biggest contributor with 61k new positions. Leisure and hospitality contributed 40k, while professional and business services added 36k and education and health services grew by 31k.

Most of the increases came from larger business with more than 500 employees which added 102K to the total. Small businesses added 29K to total private employment. Separately, the Chicago business Chicago PMI, fell to 58.4 in October from 60.4 in September.

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