Gold Price Prediction – Prices Hit Fresh 6-year Highs Despite Falling US Yields

Gold prices moved higher closing at a fresh 6-year high, despite falling US yields.  The 30-year US yield settled at an all-time low. China said that it would retaliate if the US levied additional tariffs on September 1, which helped whipsaw gold prices. It appears that only President Trump and advisor Peter Navarro believe that the volatility in the market is because of the Fed and not because of the US-China trade war. US Retail sales came in stronger than expected, along with both the Philly Fed and New York Fed manufacturing reports, but this positive news failed to lift US yields.

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Technical Analysis

Gold prices moved higher on Thursday breaking out and closing at a fresh 6-year high. Resistance is now seen near the March 2013 highs at 1,616. Support is seen near the 10-day moving average at 1,492. Short term momentum remains negative as the fast stochastic generated a crossover sell signal in overbought territory and continues to have a downward trajectory. The fast stochastic is flattening which is likely to lead to consolidation. The current reading on the fast stochastic is 85 above the overbought trigger level of 83 which could foreshadow a correction. Medium-term momentum is positive and the MACD histogram is printing in the black with and upward sloping trajectory which points to higher gold prices.

US Retail Sales were Stronger than Expected

US retail sales came in stronger than expected. The US Commerce Department reported that retail sales rose a healthy 0.7% last month, after a 0.3% gain in June. Expectations were for retail sales to come in at 0.3%. Online retailers, grocery stores, clothing retailers and electronics and appliance stores all reported strong gains. Separately, the Labor Department reported that Initial claims increased 9,000 to 220,000 for the week ended August 10. Data for the prior week was revised to show 2,000 more applications received than previously reported.