Advertisement
Advertisement

Gold Price Prediction – Prices Ease But the Pause is Likely Temporary

By:
David Becker
Published: Jun 26, 2019, 18:19 UTC

Durable goods orders slip

Gold daily chart, June 25, 2019

Gold prices eased on Wednesday as traders took profits following comments from US Treasury Secretary Mnuchin. The secretary said that a deal with China is approximately 90% complete. This lead the markets to believe that there was promise for the Trump-Xi meeting this weekend at the sidelines of the G20. Durable goods order dropped 1.3%, but non-defensive capital good rose putting upward pressure on US yields which paved the way for lower gold prices.

Technical Analysis

Gold prices eased on Wednesday after finishing well of its highs on Tuesday. Support on the yellow metal is seen near the 10-day moving average at 1,376. Resistance is seen near the June highs at 1,439. Short momentum has turned negative as the fast stochastic generated a crossover sell signal in overbought territory. The current reading on the fast stochastic is 87, above the overbought trigger level of 80, which could foreshadow a correction. The RSI (relative strength index) turned lower from a 10-year high and is currently printing a reading of 78, above the overbought trigger level of 70 which also could foreshadow a correction. Positive momentum appears to be accelerating which is reflected by the declining RSI and a slowing MACD histogram.

Durable Good Orders are Mixed

Durable goods orders which are items that are meant to last three years or more, dropped 1.3% in May after declining 2.8% in the prior month. Orders for transportation equipment tumbled 4.6% after diving 7.6% in April. Motor vehicles and parts orders rebounded 0.6% last month. Orders for non-defense aircraft plunged 28.2%. A silver lining was that new orders for US made capital goods rose more than expected in May. The Commerce Department said on Wednesday orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, increased 0.4% last month amid increases in demand for machinery, and computers. Expectations were for core capital goods orders edging up 0.1% in May. Core capital goods orders rose 2.3% on a year-on-year basis.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

Did you find this article useful?

Advertisement