Gold Price Prediction – Prices Rebound but Decline for the Week

Gold prices rebounded from session lows and climbed into the close on Friday amidst a risk-off trading background. The US dollar moved lower following a stronger than expected US ISM Services report, which hit a fresh 10-year low. US yields were mixed with the two year slightly lower and the 10-year slightly higher. Riskier assets declined for the second consecutive trading session which help gold prices gain a toe hold.

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Technical analysis

Gold prices hit fresh lows for the week but surged into the close moving higher by nearly 0.9%. For the week the yellow metal declined by 1.4%.  Prices pushed back through the 20-day moving average which is seen as support near 1,694. Resistance is seen near the 10-day moving average at 1,708.   Target resistance is the April high at $1,747.

Short term momentum has turned negative as the fast stochastic generated a crossover sell. The current reading on the fast stochastic is 62, coming down from 81 two days ago which was above the overbought trigger level of 80, which reflects accelerating negative momentum. 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 trading crosses below the 9-day moving average of the MACD line.

US ISM Manufacturing Declined Less than Expected

The ISM reported on Friday that the manufacturing slump intensified in April to its worst level in 10 years. The ISM Manufacturing Index fell to 41.5, better than expected from March’s 49.1. Expectations were for the index to fall to 35. While virtually every category showed sharp declines, the overall index was held higher by inventories, which showed a reading of 49.7 up approximately 3-points from the March reading and an 11-point jump in supplier deliveries to 76. New orders were at 27.1, down 15.1 points, while production fell to 27.5, off 20.2 points from a month earlier. The employment index slid to 27.5, a decline of 16.3 percentage points and reflective of more than 30 million claims for unemployment benefits over the past six weeks. The price index also fell, dropping 2 points to 35.3.