Gold Price Prediction – Prices Drop Breaking Down Despite Decline in the Greenback

Gold prices broke down on Friday and continued to trend lower following the US Thanksgiving Holiday.  The decline comes despite a falling US dollar and declining US yields. Worse than expected US consumer spending helped reduce yields. Most of the losses in the yellow metal were due to a technical breakdown

Trade gold with FXTM

Technical analysis

Gold prices continued to break down on Friday as the downtrend accelerated. Support is seen near the July lows at 1,756.  Resistance is seen near the 10-day moving average at 1,842. Short-term momentum has turned negative. The current reading on the fast stochastic is 6, well below the oversold trigger level of 20, which could foreshadow a correction. Medium-term momentum remains negative as the MACD (moving average convergence divergence) histogram prints in the red with a declining trajectory which points to lower prices.

Consumer Spending Declines

Consumer spending moderated in October, According to the US Commerce Department. Spending rose 0.5% after a revised 1.2% gain in the prior month. This is the smallest gain since April. Expectations were for a 0.4% rise. Incomes sank 0.7% in October as government programs ended. Expectations were for a 0.5% drop. Inflation slowed as well. The Personal Consumption Expenditures (PCE) Index, the Feds favored gauge for inflation slowed to a 1.2% annual rate down from a 1.4% gain in September. The core PC which removes food and energy increased at a 1.3% annual rate, down from 1.5% in the prior month. The savings rate dipped to 13.6% from 14.3%. Wages and salaries rose 0.7% in the prior month.