Gold Price Prediction – Prices Rebound but are Poised to Test Lower Levels

Gold prices rebounded as the dollar eased by US yields continued to rise. US non-farm payrolls were in line with expectations but the unemployment rate fell. The US 10-year yield broke out, rising nearly 9-basis points this week. The interest rate curve steepens, where long-term yields rise faster than short-term yields, which weighed on gold prices for the week. The yield curve steepened to the highest level since 2017 as the 10-year broke out to fresh highs. For the week gold prices were down 2%.

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Technical analysis

Gold prices rebounded on Friday after breaking down on Thursday. Prices are poised to test former trend line support at 1,819. The breakdown will not be rejected unless prices are able to recapture the breakdown level. Target support is seen near the November lows at 17,64. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium-term 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).

Payrolls Rise In Line with Expectations

Non-farm payrolls came in roughly in-line with expectations but the Unemployment Rate fell more than expected dipping to 6.3% versus 6.7% consensus. At 49K new jobs created in January, it appears that job creation has stalled. December’s already bad initial read fell 87K to -227K new jobs created that month, and November saw a slide from -264K to -336K in this latest revision.