Gold Price Prediction – Gold Stabilizes But Momentum Remains Negative

Soft EU PMIs fail to weigh on gold prices
David Becker
Comex Gold

Gold prices consolidated on Thursday despite a rising dollar, which benefited from weaker than expected EU PMI number for April that was released on Thursday. US yields fell which helped the yellow metal remain stable. The trend continues to point to lower prices.

Technical Analysis

Gold prices formed a doji day were the open and close were at the same level. Resistance is seen near the former breakdown level which is an upward sloping trend line that comes in near 1,284. Additional resistdance is seen near the 10-day moving average at 1,289. Support is seen near an upward sloping trend line that comes in near 1,260. Momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell 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 and accelerating negative momentum. The fast stochastic also generated a crossover sell signal, which points to accelerating negative moemtnum. The current reading on the fast stochastic is 6, which is below the oversold trigger level of 20, and could foreshadow a correction.

EU PMIs Come in Weaker than Expected

Eurozone preliminary PMI readings for April were reported, and they came in weaker than expected.  The composite reading declined to 51.3 versus expectations that it would come in at 51.8 expected.  Manufacturing PMI rose to 47.8 but was offset by a larger than expected drop in the services PMI to 52.5.  Looking at the country breakdown, Germany’s composite rose to 52.1 versus expectatinos of 51.7 due to a higher manufacturing PMI of 44.5 and a higher services PMI of 55.6.  Strong UK March retail sales were reported which initially buoyed the pound.  Both headline and ex-auto fuel were expected to fall -0.3% month over month.  The headline retail sales increased by 1.1% and ex-autos increased by  1.2%. They both were expected to decline by 0.3% month over month.

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