Gold Price Prediction – Prices Edge Lower as US Yields Rise

Gold prices edged lower as the dollar was unchanged and US long-term yields moved higher. Generally, gold prices are negatively correlated to yields. Stronger than expected payroll data in conjunction with robust housing data put upward pressure on US treasury yields which generated headwinds for gold prices.

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Technical analysis

Gold prices edged lower and tested resistance is seen near the 10-day moving average at 1,945. Support is seen near the September lows at 1,848.  The 10-day moving average crossed through the 50-day moving average which means a short-term downtrend is in place. Medium-term momentum is negative but consolidating as the MACD (moving average convergence divergence) histogram is printing in the red with a rising trajectory that points to consolidation. Short-term momentum has turned positive as the fast stochastic recently generated a crossover buy signal. The current reading on the fast stochastic is 32, rebound from the oversold trigger level of 20 which could foreshadow a correction.

Private Payrolls Rose More than Expected

US corporations added more jobs than expected in September due in good part to a surge in manufacturing. ADP reported that private-sector jobs increased by 749,000, more than the 600,000 expected. This comes ahead of Friday’s government employment report which is expected to show an increase of approximately 800,000 jobs, while the unemployment rate is expected to fall to 8.2%. Most of the gains were in the manufacturing space. ADP found that manufacturing added 130,000 jobs.