Gold Price Prediction – Prices Formed Doji Day Following Robust PPI

Gold prices traded sideways on Thursday, forming a Doji day. The acceleration in producer prices reversed the upward bias to the yellow metal. PPI rose as much as it did in July as it did in June and more than expected. Shipping and trucking costs added to whole price increase. What is clear from Wednesday’s CPI is that inflation did not spill over to the consumer.

Technical analysis

Gold prices traded sideways forming a Doji Day which is a sign of indecision. Target support is seen near the March lows at 1,677. Resistance is seen near former support at the June lows at 1,755. Short-term momentum has turned positive as the fast stochastic generated crossover buy signal.  Medium-term momentum has turned negative as the MACD (moving average convergence divergence) generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in negative territory with a downward sloping trajectory which points to lower prices.

U.S. Producer Prices Rose More than Expected

According to the Labor Department U.S. producer prices increased more than expected in July, suggesting inflation could remain high due to supply chain and shipping costs. The producer price index increased 1.0% last month after rising 1.0% in June. Year over year in July the PPI jumped 7.8%, a record high.