Gold Price Prediction – Prices Fail to Break Resistance and Consolidate

Gold prices attempted to move higher but failed at resistance and eased lower into the close. The dollar rebounded from session lows which reversed the course for gold prices. Yields were mixed, with the 10-year continuing to trend higher while the 10-year Treasury yield pulled back. More robust than expected Markit PMI numbers helped buoy the 2-year yield, which weighed on the yellow metal.

Technical analysis

Gold prices attempted to move higher but failed at trend line resistance but held just above support near the 50-day moving average at 1,779. Additional support is seen near the September lows at 1,721. Resistance is seen near a downward sloping trend line that comes in near 1,790. The 10-day moving average is poised to cross above the 50-day moving average which means a short-term uptrend is about to be in place. Short-term momentum turned negative as the fast stochastic generated a crossover sell signal. Medium-term momentum has turned positive 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 a flat trajectory which points to consolidation.

Markit reported on Friday that the U.S. Composite Output Index rose to 57.3 from 55.0 in September compared to expectations of 54.7. 3-month high.  Flash U.S. Services Business Activity Index increased to 58.2 compared to 54.9 in September.  Expectations were for a reading of 55.1. 3-month high.