Gold Price Prediction – Gold Tumbles as the Dollar Gains Traction

Gold prices are trading under pressure as the dollar gains traction and riskier assets rally.  The ECB’s Hanson warned of risk from trade wars, while Coeure discussed the issues with Greek debt. U.S. weekly chain store sales buoyed the dollar which paved the way for lower gold prices.  Support is seen near the December 2017 lows at 1,236, while resistance is seen near the 10-day moving average at 1,276.  Momentum is negative as the MACD (moving average convergence divergence) histogram prints in the red with a downward sloping trajectory which points to lower prices.

U.S. weekly chain store sales jumped

U.S. weekly chain store sales jumped 3.0% in the week ended June 23, that’s more than double the 1.4% clip the week before. On a 12-month basis, sales edged up a bit to a 3.4% year over year pace versus 3.3% year over year previously, though slower than the hefty 4.4% year over year pace in the June 9 week. The reported noted ongoing solid performance in most sectors, and project comp sales at 3.1% year over year for the first fiscal quarter, which was the strongest since the first quarter of 2012. But it warned that comps will become more difficult in the second fiscal quarter of the year versus the first.

The ECB was on the Tape

The ECB’s Hansson warns of big risk from trade wars. The Governing Council member said global supply chains are “very fragile”, adding that “when these get disrupted then consequences can be rather big”. Hansson added that “the rhetoric that is being used now it actually a bit scary”, leaving big risk. Against that background the ECB’s monetary policy will remain “rather expansionary” even after the end of QE and the “stock of assets and reinvestments of maturing bonds are more important than net purchases”.

The ECB’s Coeure said that measures on Greek debt going in right direction. The Executive Board member said “this is a turning point for Greece and Europe. Greece is now free from European surveillance” and “will also get a clear boost from the debt relief promised by European governments for a long time”. The measures agreed will make “Greek debt more sustainable in the medium term. However, Coeure warned that “Greece will go ahead from a dialogue with the European institutions and hte IMF to a dialogue with the financial markets, which will neither be easier nor more pleasant.