Gold Price Prediction – Prices Drop but Hold Support Following Strong Jobless Claims

Gold prices moved lower on Thursday dropping more than 1%. The catalyst appears to be profit taking. The decline in the price of the yellow metal comes after a stronger than expected jobless claims report. The solid data was countered by a weaker than expected durable goods orders report. The dollar gained traction on Thursday paving the way for lower gold prices.

Technical Analysis

Gold prices dropped on Thursday. Prices held just above support near the 10-day moving average at 1,320. Additional support is seen near the 50-day moving average at 1,290. Short-term momentum has turned negative. The fast stochastic generated a crossover sell signal in overbought territory. The current reading on the fast stochastic is 75, below the overbought trigger level of 80. This reflects accelerating negative momentum. Medium term momentum is turning negative. The MACD (moving average convergence divergence) index is poised to generate a crossover sell signal.

Jobless Claims Rise but There is a Caveat

Jobless claims dropped 23,000 to 216,000 for the week ended February 16, according to the Labor Department. Expectations were for a smaller decline to 229,000. The issue appears to be that several states included the President’s Day Holiday. The four-week moving average of claims, rose 4,000 to 235,750 last week, the highest level since January 2018.

Durable Goods Orders Rose

Durable goods orders rose 1.2% in December which was the best result in the past four months, but much of the strength came from a surge in orders for aircraft. Expectations were for a climb of 1.5%. The December increase orders for durable goods followed a 1% rise in November. The Commerce Department reported that business investment, called non-defense capital goods excluding aircraft, dropped 0.7%. Data for November was revised down. Expectations where for core capital goods orders rising 0.25 in December. Core capital goods orders increased 6.1% year over year. Shipments of core capital goods rose 0.5% in December after an unrevised 0.2% drop in the prior month.