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Gold Price Prediction – Prices Consolidate Ahead of CPI and Retail Sales

By:
David Becker
Published: Sep 10, 2018, 19:40 UTC

Gold prices continued to trade sideways forming a doji day which is where the open and close are at the same level.  Prices action was muted as many

Comex Gold

Gold prices continued to trade sideways forming a doji day which is where the open and close are at the same level.  Prices action was muted as many celebrated the Jewish new year which reduced volatility and liquidity. Jobs data initially buoyed the greenback, but that trend lost ground on Monday.

Technical Analysis

Gold prices moved sideways, as prices where unable to recapture resistance near the 10-day moving average at 1,198. Support on the yellow metal is seen near the August lows at 1,160. Short-term momentum remains negative as the fast stochastic prints in the red with a declining trajectory after recently generating a crossover sell signal.

Jobs Data Increased Rate Hike Chances

The jobs data released on Friday has practically solidified that the Fed will increase interest rates when they meeting in September.  At the end of August, the Fed fund futures contracts were predicting a 95% chance that the Fed would raise rates. The chances of a hike have moved up 3% to 98%, all but baking in the cake a rate hike.  The jobs report has helped increase the chances of a December rate hike which is now 80% from 67% at the end of August.

Wages Where the Focus for the Markets

The US jobs data released on Friday was mixed. The headline number was better than expected by revision took some of the luster away from the robust number. Hourly earning seemed to steel the show and pushed yields higher. The unemployment rate and the decline in the participation rate, point to some minor weakness. The unemployment rate held near low of 3.9% percent, according to a Bureau of Labor Statistics report Friday. Expectations were for a decline to 3.8%. Expectations were for a 190K rise in the headline figure. Additionally, and most importantly, the 2.9% year over year uptick in hourly earnings was stronger than the 2.7% increase expected. On a month over month basis hourly earnings jump a robust 0.4%. The wage growth was the highest since April 2009. The participation rate fell to 62.7%, matching the lows since mid-2016.  This means that less people were looking for jobs than any time in the past 2-years.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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