Gold Price Prediction – Price attempt to Break Out but Fail to Recapture the October Highs

David Becker
Comex Gold
Comex Gold

Gold prices attempted to breakout in the trading session, following a softer than expected ADP private payroll report, but pulled back as yields rebounded following a stronger than expected ISM services report.  Jobless claims fell more than expected which will provide the backdrop for Friday’s government payroll report.

Technical Analysis

Gold prices tested the October highs at 1,244 but where unable to close near the highs of the session and pulled back slightly to close below 1,240. Support on the yellow metal is seen near the 20-day moving average at 1,221 and then the 50-day moving average at 1,218. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal in overbought territory. The current print on the fast stochastic is at 86, above the overbought trigger level of 80 which could foreshadow a correction.

Data was Mixed

The US reported that ISM non-manufacturing index rose to 60.7 last in November.  Expectations were for the index to dip to 59.7 compared to the print in October at 60.3. This better than expected number helped buoy the dollar and weighed on gold prices.

ADP reported that the pace of job creation in November slipped amid a tight labor market. Private companies added 179,000 payrolls last month. This compared to forecast a gain of 195,000. Job gains were concentrated in medium-size businesses, with 50 to 499 employees, and came almost exclusively from services-providing companies. Professional and business services led with 59,000, while education and health services added 49,000 and leisure and hospitality was next with 26,000. Wall Street-related financial activities saw growth of 8,000, while information services lost 1,000 positions. On the goods side, construction added 10,000 and manufacturing saw growth of 4,000.

Jobless claims dropped 4K this week to 231K for the week ended December 1, according to the Labor Department. Data for the prior week was revised to show 1K more applications received than previously reported. Expectations were for claims falling to 225K in the latest week. U.S. unit labor costs rebounded less than initially thought in the third quarter and the decline in the prior period was sharper than previously estimated, suggesting moderate growth in wage inflation. Claims had risen for three straight weeks, touching an eight-month high of 235k during the week ended November 24.

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