Gold Price Prediction – Prices Break Out Following NFP

Gold prices broke on Friday following the Labor Departments’ employment report. Expectations are for a 765,000 increase in nonfarm payrolls. The dollar moved lower, which gave a boost to the yellow metal. U.S. Treasury yields moved lower.

Tecnical analysis

Gold prices surged higher, breaking out of a tight range. Resistance is seen near the July highs at  1,831. Support is seen near the 10-day moving average of 1,808. The 10-day moving average crossed above the 50-day moving average, which means that a short-term uptrend is now in place. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Prices are overbought as the fast stochastic is printing a reading of 85, above the overbought trigger level of 80, which could foreshadow a correction.   Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This buy signal occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line).

NFP Rose Less than Expected

Friday’s employment picture was disappointing, despite a drop in the unemployment rate. According to the Labor Department, nonfarm payrolls rose by 235K compared to expectations to increase by 733K. July was revised to 1.053 in July. According to the Bureau of Labor Statistics, the unemployment rate declined in August to 5.2% in line with expectations and lower than the 5.4% level in July.