Gold Price Prediction – Prices Edge High Despite Dollar Gains

Gold prices edged higher but nearly formed a doji day. Prices appear to be rangebound. The dollar surged higher which weighed on the yellow metal following a stronger than expected U.S. Consumer Price Index. Following the robust inflation numbers, U.S. yields surged, with the 2-year rallying more than the 10-year yield, reflecting a flattening of the interest rate curve.

Technical analysis

Gold prices moved higher but continue to consolidate. Prices tested support near the near the 10-day moving average near 1,795. Resistance is seen near the 50-day moving average at 1,836.   Short-term momentum has flip-flopped turning positive as the fast stochastic generated a crossover buy signal. Prices are overbought as the fast stochastic is printing a reading of 85, above the overbought trigger level of 80, which could foreshadow a correction. Medium-term momentum has shifted positively as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in positive territory with an upward sloping trajectory which points to higher prices.

CPI Rises More than Expected

According to the U.S. Labor Department, consumer inflation rose June at its fastest pace in nearly 13 years amid a burst in used vehicle costs and price increases in food and energy. The consumer price index increased 5.4% year over year the most significant jump since August 2008. Expectations were for a 5% gain. Month over month headline and core prices rose 0.9% against 0.5% estimates. Core CPI, which removes food and energy rose 4.5%, the sharpest move for that measure since September 1991 and well above the estimate of 3.8%.