Gold Price Prediction – Prices Consolidate After Tuesday’s Rally

Gold prices were nearly unchanged on Wednesday, following Tuesday’s surprise interest rate cut by the Federal Reserve. Stock prices rebounded sharply after selling off which put upward pressure on US yields and help buoy the US dollar. This lead to headwinds for gold prices which consolidated below the most recent highs. The US service sector activity was stronger than expected in February, but that is prior to the discovery of any coronavirus in the US. US ADP private payrolls also came in stronger than expected according to ADP.

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Gold prices consolidated on Wednesday after surging higher by 3.5% on Tuesday. Prices are poised to test the February highs at 1,690. Short term support is seen near the 10-day moving average at 1,620. Additional support is seen near the 50-day moving average at 1,575. Medium-term momentum is neutral. The whipsaw price action has not allowed momentum to accelerate. The MACD recently generated a crossover sell signal and is now poised to generate a buy signal.  The downward momentum of the fast stochastic seems to have halted and it has generated a crossover buy signal which points to accelerating short term positive momentum.

ISM Services Rise More than Expected

The Institute of Supply Management reported that the US services sector activity accelerated to a one-year high in February. The ISM reported that its non-manufacturing activity index increased to a reading of 57.3 last month, the highest level since February 2019, from 55.5 in January. Expectations were for the index to fall to a reading of 54.9 in February.

Employment excluding government jobs rose by 183,000 for the month, according to a report Wednesday from ADP topping the 155,000 expected. The job growth came during a month in which fear spread that the coronavirus strain would lead to a global economic slowdown.