Gold Price Prediction – Prices Drop Following Robust Retail Sales

Gold prices moved lower, breaking through trend line support and poised to test lower levels. The dollar moved higher, weighing on the yellow metal despite a slight pullback in long-term US treasury yields. A stronger than expected US PPI report in conjunction with a robust January retail sales report helped buoy the greenback. With momentum turning negative, the chance of a breakdown has increased.

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Technical analysis

Gold prices moved lower breaking down below trend line support near $1,789 and poised to push through the November lows at 1,764. A close below this level would lead to a test of the . A break of this level would lead to a test of the June lows at 1,667.  Resistance is seen near the 10-day moving average at 1,815. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line the 9-day moving average of the MACD line).

Retail Sales Rose More than Expected

US retail sales rose 5.3% in January, according to the US Commerce Department. Expectations were for retail sales to rise by 1.2%. Excluding autos, sales rose 5.9%, also far ahead of the 1% estimate. Electronics and appliances saw the biggest increase, up 14.7% for the month, while furniture and home furnishing stores were up 12% and online spending at nonstore retailers jumped 11%. Online shopping is the biggest gainer since January 2020, up 28.7%, while building materials rose 19% and sporting goods increased 22.5%.