Gold Price Prediction – Prices Move Sideways on Mixed Data

Gold prices consolidated on Monday, trading sideways as the dollar gained traction. Prices were down approximately 0.12% for the session. Softer than expected retail sales helped take some of the gains out of the greenback giving gold prices a respite. US yields moved higher following a stronger than expected ISM manufacturing report. Additionally, solid gains in Chinese PMI helped riskier assets gain traction.

Technical Analysis

Gold prices moved sideways on Monday. Prices formed an inside day which is a lower high a higher low. Additionally the open and close where very close to one another forming a doji day. Resistance on the yellow metal is seen near the 10-day moving average at 1,305. The 10-day moving average just crossed below the 50-day moving average showing that a short-term down trend is now in place. Momentum has turned negative as the MACD (moving average convergence divergence) index 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 the red with a downwarm sloping trajectory which points to lower prices and accelerating negative momentum. The fast stochastic tumbled which reflects accelating negative short term momentum. The only caveat is that the fast stochastic appear to be showing that the gold market has declined too far too fast and is printing a reading of 9, below the oversold trigger level of 20 which could foreshadow a correction.

Retail Sales Declined in February

February retail sales declined 0.2% as households cut back on purchases of furniture, clothing, food and electronics declined. Data for January was revised higher to show retail sales increasing 0.7% instead of gaining 0.2% which was previously reported. Expectations were for retail sales to rise by 0.3%. Retail sales in February increased 2.2% year over year.  February retail sales report was delayed by a 35-day partial shutdown of the federal government that ended on Jan. 25. In February, sales at building materials and garden equipment and supplies dealers tumbled 4.4% the biggest drop since April 2012. Sales of clothing stores fell 0.4%. Sales at food and beverage stores declined 1.2%, the biggest drop since February 2009.