Gold Price Prediction – Prices Consolidate Despite Robust Manufacturing Data

Gold prices continued to trade sideways consolidating in a very tight range. The lack of year-end liquidity is also generating a consolidation in the US dollar and US yields which are limiting the moves in the yellow metal. Hedge funds reduced their long positions in futures and options according to the latest commitment of trader’s report released for the date ending December 10, 2019. Manufacturing data released by the Federal Reserve was stronger than expected while Housing starts in the US were also stronger than expected.

 

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Technical Analysis

Gold prices attempted again to move higher but continued to consolidate and was unable to push through resistance near the 50-day moving average near 1,478. Short term support is seen near the 10-day moving average at 1,470. Additional support on the yellow metal is seen near an upward sloping trend line that comes in near 1,462. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal. The trajectory of the fast stochastic has slowed which points to consolidation. Medium-term momentum is positive as the MACD histogram prints in the black with a rising trajectory which points to higher prices.

Industrial Output Rise

The Federal Reserve reported that industrial output rebounded more than expected in November. Manufacturing production rose 1.1% last month after a downwardly revised 0.7% fall in October. Industrial output also rose 1.1% in November after a downwardly revised drop of 0.9% in October. Excluding automobiles and parts, overall industrial production and manufacturing output in November rose 0.5% and 0.3% respectively.

 

Expectations had been for manufacturing output would rise 0.7% and industrial output would increase by 0.8% in November. Production at factories still fell 0.8% in November on a year over year basis. The United Auto Workers union reached a new four-year labor contract with General Motors in late October, ending a strike by about 46,000 workers with the No. 1 U.S. automaker.