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David Becker
Gold daily chart, October 26, 2018

Gold prices attempted to move higher on Friday, but where unable to pierce through resistance.  Prices initially had a bid as the risk off trade took hold following worse than expected earnings from technology titans Amazon and Alphabet.  Better than expected US GDP helped put a floor under prices, but stronger than expected inflation did not help Gold prices gain ground. The dollar received a lift following the GDP number capping the rise in the yellow metal.

Technical Analysis

Gold prices attempted to move higher making a new high for October which is seen of 1,243 which is now resistance. Support is seen near the 20-day moving average at 1,214.  The 20-day moving average crossed above the 50-day moving average which means a medium term up trend is now in place.  Positive momentum continues to decelerate as the MACD (moving average convergence divergence) histogram prints in the black with a declining trajectory which points to consolidation.

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GDP was Stronger than Expected, Helping to Buoy the Dollar

According to the US Commerce Department US Gross domestic product expanded by a 3.5% annual rate. This compared to expectations that it would rise by 3.4%. On the inflation front the PCE index increased by 1.6% in the latest quarter much less than the 2.2% expected. Consumer spending, which accounts for more than two thirds of U.S. economic activity, grew by 4% in the Q3 which was the strongest since the fourth quarter of 2014. The strong rise in consumer spending helped offset a 7.9% decline in business spending. That was the biggest quarterly decline in business spending since the first quarter of 2016.

The stronger than expected number was encouraging but it was softer than last quarter.Gross domestic product grew by 4.2% in the second quarter, marking the fastest quarterly expansion since the third quarter of 2014. The economy increased by 2.2% annual pace in the first quarter of the year.

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