Gold Price Prediction – Prices Eases to Trend line Support as Momentum Consolidates

Gold prices eased on Thursday unable to break out as the dollar rebounded generating headwinds for the yellow metal. US yields declined as riskier assets sold off, and the VIX volatility index on stocks surged more than 40%. Producer prices unexpected rose in May after tumbling in April, which was the largest decline in PPI since the Great Recession. US jobless claims rose slightly less than expected, decelerating down to 1.54 new jobless claims for the latest week.

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Technical analysis

Gold prices eased slightly after closing above trend line resistance which is now supported at 1,730. Prices could continue to slip back to support near the 10-day moving average at 1,717 Target support is seen near the 50-day moving average at $1,706. Short term momentum has turned positive as the fast stochastic generated a crossover buy and continued to accelerate higher. The current reading on the fast stochastic is 74, up from 35 yesterday. Medium-term momentum remains negative as the MACD (moving average convergence divergence) histogram prints in the red with a rising trajectory which points to consolidation.

US Wholesale Prices Rebound

US PPI came in stronger than expected rising 0.4% last month after plunging 1.3% in April, which was the biggest decrease since December 2009. Year over year in May, the PPI decreased 0.8%. That followed a 1.2% decrease in April, the biggest drop since November 2015.