Gold Price Prediction – Prices Drop as the Dollar RalliesGold drops but remains range bound
Gold prices moved lower on Tuesday, as the dollar gained traction following a stronger than expected US ISM services index report. The move comes despite a larger than expected trade deficit that contracted to $52.5 billion in September. Yields moved higher across the curve, helping to buoy the greenback which is breaking down versus the euro and paving the way for lower gold prices. Since gold is priced in dollars a stronger US currency weighs on the value of gold.
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Gold prices moved lower on Tuesday pushing through support that is now short-term resistance near the 10-day moving average at 1,499. Support is seen near the 100-day moving average at 1,474. Prices are rangebound and prices continue to chop sideways. Short term momentum is poised to turn negative. The fast stochastic is about to generate a crossover sell signal. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index recently generated a crossover buy signal. Its just above to turn negative. The MACD histogram is printing in the black with a declining trajectory that points to consolidation.
The US Service Sector Remain Strong
A survey that describes the current state of the service sector showed the US economy remains stable. The Institute for Supply Management, reported Tuesday that its service index grew to 54.7% last month, up from 52.6% in September. Measures of sales, new orders and employment all rebounded from the previous month. The service sector, which accounts for more than two-thirds of US economic activity, has been expanding for 117 straight months, according to the survey-based ISM index.