Gold Price Prediction – Prices Consolidate Recent Losses

Gold prices consolidated after declining more than 1% on Tuesday after sliding 1.8% Monday. The dollar continued to rally, putting downward pressure on the yellow metal. U.S. short-term treasury yields continued to rise as the markets focused on inflation. The Commerce Department released its core and headline PCE, which is the Fed’s favored gauge for measuring inflation.

Technical analysis

Gold prices moved lower, holding just above support is seen near an upward sloping trend line that comes in near 1779. Resistance is seen near the 50-day moving average at 1,788, and then the 10-day moving average at 1,839. Medium-term momentum has turned negative as the MACD (moving average convergence divergence index) generated a crossover sell signal. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line. Short-term momentum is also negative as the fast stochastic recently generated a crossover sell signal. Prices are oversold as the fast stochastic is printing a reading of 7, below the oversold trigger level of 20.

Prices for personal consumption expenditures excluding food and energy increased 4.1% from a year ago, in line with expectations. Including food and energy, the PCE index rose 5%, the fastest gain since November 1990. Consumer spending increased 1.3% during the month, higher than the 1% expected. That came with a 0.5% increase in personal income, well ahead of the 0.2% estimate.