Gold Price Prediction – Gold Slides as Safe Haven Concerns Dissipate

David Becker
Updated: May 16, 2019, 18:46 GMT+00:00

US Yields rise weighing on gold prices

Gold daily chart, May 15, 2019

The Ris in market sentiment is weigh on gold prices as safe haven concerns disapate. Riskier assets moved higher as sentiment improved on Wednesday into Thursday. There are no scheduled discussions between the US and China but Tariffs on aluminum and steal from Mexico and Canada have been put on hold. Japan reported weaker than expected Machine Tools, and the US reported better than expected jobless claims which boosted the greenback. The Atlanta Fed’s GDPNow model is now tracking 1.1% Q2, down from 1.6% previously.  The New York Fed’s Nowcast model is tracking 2.2% for Q2 vs. 2.1% the previous week.

Technical Analysis

Gold prices tumbled on Thursday as jobless claims rose more than expected. Prices dropped through the former breakout level and tumbled to the 10-day moving average near 1,287 which appears to be short term support. Longer term support is seen near an upward sloping trend line that comes in near 1,274. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal in overbought territory. The current reading on the fast stochastic is 72, which is below the overbought trigger level and on the upper end of the neutral range. Medium term momentum is turning nuetural as the MACD (moving average convergence divergence) histogram is printing in the black with a flattening trajectory which points to consolidation.

Jobless Claims Drop More than Antisipated

Jobless claims fell more than expected putting upward pressure on yields as sentiment in riskier assets rose. According to the US Labor Department Jobless Claims dropped 16,000 to 212,000 for the week ended May 11. Data for the prior week was unrevised. Claims have been rangebound recently. Expectations had been for jobless claims to drop to 220,000 in the latest week. The four-week moving average of initial claims, rose 4,750 to 225,000 last week.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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