Gold Price Prediction – Prices Consolidate as Yields Rise Despite Weak Payroll Report

Gold prices consolidated following a softer than expected non-farm payroll report. Yields rallied despite the weak number, as riskier assets continued to rise.  The dollar index closed at a 31-month level not seen since April of 2018.

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Technical analysis

Gold prices consolidated and traded sideways but are still poised to test the November highs near 1,900. Support is seen near the 10-day moving average at 1,815 and then the 200-day moving average at 1,803.  The weekly Fibonacci retracement of the rally from August 2019 to July 2020 comes in near 1,737. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Medium-term momentum is poised to turn positive as the MACD (moving average convergence divergence) index is poised to generate a crossover buy signal. This 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).

U.S. Non-farm payrolls Rise Less than Expected

U.S. non-farm payrolls rose by 245,000, much less than expected. Employment in transportation and warehousing rose by 145,000 in November. Most of the losses came in the retail space, which decreased by 35,000. Leisure and hospitality gained 31,000 but is still 3.4 million below February’s level. Health care added 46,000 jobs, and government payrolls declined by 99,000. The unemployment rate edged down to 6.7% from 6.9% in November.