Gold Price Prediction – Gold Slides on Stronger Greenback

Gold prices failed to break out and moved lower through out the trading session as the dollar gained traction against most of the major currencies. Since gold is priced in US dollars, the stronger greenback generated headwinds for gold prices. Retail sales came in positive, but softer than expected, but the revisions to prior months helped lift short term yield helping to buoy the US dollar.

Technical Analysis

Gold prices attempted to break out on Friday but was unable to push above trend line resistance near 1,388. Prices slipped through out the trading session settling lower on the day. For the week gold prices are nearly unchanged as it formed a weekly doji week, which is a since of indecision. Short term, momentum remains positive as the fast stochastic recently generated a crossover buy signal. The current reading of 82, is above the overbought trigger level of 80 and could foreshadow a correction. Medium term positive momentum is decelerating as the MACD (moving average convergence divergence) histogram is printing in the black with a declining trajectory which points to consolidation. The relative strength index (RSI) moved lower out of overbough territory which reflects accelerating negative momentum.

Retail Sales Grow Slower than Expected

US retail sales rose 0.5% in May, according to the Commerce Department, as households bought more cars. Expectations were for retail sales to rise by 0.6%. Data for April was revised up to show retail sales gaining 0.3%, instead of dropping 0.2% as previously reported. Excluding automobiles, gasoline, building materials and food services, retail sales advanced 0.5% last month after an upwardly revised 0.4% rise in April. Core retail sales correspond most closely with the consumer spending component of gross domestic product. The solid gains in core retail sales in April and May suggested consumer spending was gaining speed in the Q2 after braking sharply in the Q1.