Gold Price Prediction – Gold Slides Despite Dollar Selloff

Gold prices moved lower, despite a decline in the dollar, following flat US inflation and stronger than expected consumer spending. With the Fed’s key inflation gauge hanging below the target of 2% year over year, which should allow the Fed, who meets beginning tomorrow, to continue with their montra that they will be patient and flexible. This weighed on the dollar, but failed to buoy the price of the yellow metal. Yields moved higher as consumer spending was stronger than expected.

Technical Analysis

Gold prices dipped forming an inside day which is a sign of indecision. Prices slipped toward support near the 10-day moving average at 1,277. A break through this level would lead to a test of the April lows at 1,266. Resistance on the yellow metal is seen near the 50-day moving average at 1,299.

Medium 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 an upward sloping trajectory which points to higher prices and accelerating positive momentum. The fast stochastic continue to rise reflecting accelerating positive momentum The current reading on the fast stochastic is 34, is in the middle of the neutral range, above the 20 oversold trigger level.

Inflation Comes In Lighter than Expected

The Fed’s preferred gauge of corr inflation was up 0.1% month over-month according to the Commerce Department. Core PC was up 1.7% year over year. The headline number rose 0.2% for a 1.5% increase over the year. The PCE inflation gauge called the PCE deflator is the Fed’s key inflation metric. The central bank considers 2% a healthy level for price stability.