Gold Price Prediction – Gold Slips Following Soft EU PMI Data

Gold prices moved lower on Friday in light trade, following the US Thanksgiving Day holiday.  Gold was capped by a rebound in the dollar, as softer than expected European PMI data weighed on the Euro. Gold has reached a critical resistance point, as the dollar has weakened given recent soft data. This weekends meeting between the UK and EU on Brexit will be key for gold. If no agreement is reached, gold prices could receive a boost.

Technicals

Gold prices moved lower on Friday after reaching critical resistance on Friday. Prices reached trend line resistance which was created from a downward sloping trend line that connected the highs in October to the highs in November and comes in near 1,228. Support is seen near the 20-day moving average at 1,220. Additional support below this level is seen near the 50-day moving average at 1,213.  Momentum is neutral. The MACD (moving average convergence divergence) index recently generated a crossover buy signal but the trajectory of the MACD histogram is flat. The RSI (relative strength index) has turned downward reflecting decelerating positive momentum. The fast stochastic is topping out and is poised to turn lower which also reflects decelerating positive momentum.

European Data was Weaker than Expected

European data was weaker than expected, in both services and manufacturing according to the latest eurozone flash PMIs for November.  Manufacturing fell to 51.5 versus expectations that it would remain at 52.0 while services fell to 53.1 versus 53.6 expected, dragging the composite PMI lower to 52.4 versus. 53.0 expected.  German and French composite PMIs came in at 52.2 and 54.0, respectively, both down from October.  The EU data was very disappointing and does not reflect a rebound in the Q4. QE will end in December and there are discussions of another plan by the ECB to keep the economy on the mend, despite the market looking for a rate hike in the middle of 2019.