Gold Price Prediction – Prices Drop as Trade Premium Declines

Gold prices dropped slightly more than 0.6% on Friday as news of a potential trade agreement removed some of the geopolitical premium in the price of the yellow metal. News that there is a potential pathway to Brexit came in the form of the comment by EC President Donald Tusk citing promising signals of progress. Prices were initially buoyed by news that an Iranian oil tanker was likely hit by a missile attack in the Red Sea.  Some believe the Saudi’s in a possible retaliation for the attacks against its facilities in mid-September.

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Technical Analysis

Gold prices moved lower on Friday for a second consecutive trading session. For the week gold is down approximately 1%.  Prices settled off the lows rebounding ahead of support near an upward sloping trend line that comes in near 1,471. Resistance is seen near the 10-day moving average at 1,494, and then a downward sloping trend line that comes in near 1,517. Short term momentum has whipsawed and turned negative as the fast stochastic generated a crossover sell signal. The fast stochastic is printing in the middle of the neutral range. Medium-term momentum is beginning to consolidate. The MACD histogram is printing near the zero-index line with a flat trajectory which points to consolidation, but also a potential crossover buy signal is about to occur.

Import Prices Rose

Prices of goods that are imported into the United States rose slightly in September driven by lower prices for good that excluded oil.  According to the Labor Department, import prices increased by 0.2% last month. Expectations were for import prices to remain flat month over month. The import data that was released in August was revised to import prices declined by 0.2% instead of the 0.5% decline previously reported.