Gold Price Prediction – Prices Decline Despite Drop in Jobs Data

Gold prices moved lower as the dollar rebounded putting downward pressure on the yellow metal. The dollar was buoyed despite a smaller than expected increase in ADP private payrolls which put downward pressure on US yields. Hedge funds reduced long position in futures and options and added to short-positions reducing the net short held by the managed money category.

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Technical analysis

Gold prices reversed the recent rally and headed south as the dollar rebounded. Prices pushed through short-term support is seen near the 10-day moving average at 1,946, which is now seen as short-term resistance. Target support is seen near the 50-day moving average at 1,896. Additional resistance is seen near the August highs at 2,075. Medium-term momentum is decelerating as the MACD histogram is printing in the red with a rising trajectory which points to consolidation. Short-term momentum has turned negative after recently turning positive which is a sign of consolidation. The relative strength index has turned lower reflecting decelerating positive momentum.

US Private Payrolls Rise Less than Expected

US Private payroll growth accelerated less than anticipated in August, according to ADP. Companies added 428,000 jobs during the month, well below the 1.17 million estimates and more than the 212,000 that ADP measured for July. Big business dominated job creation, as firms with more than 500 employees added 298,000 workers. Medium-sized businesses were next with 79,000 while companies with fewer than 50 workers grew by 52,000. Job creation skewed heavily to services, which added 389,000 compared with the 40,000 for goods producers.