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David Becker

Gold prices moved higher on Friday rebounding from Thursday slide despite a gain in the greenback and higher US yields. Riskier assets sold off as traders took profits on technology equities despite robust earnings results.   US consumer spending was stronger than expected while the Chicago PMI (the final regional PMI number)ahead of the National number on Monday) edged slightly lower.

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Technical analysis

Gold prices higher generating a higher low and a higher high and are poised to test resistance seen near the 10-day moving average at 1,897. Support on the yellow metal is seen near the September lows at 1,848. Short-term momentum is negative as the fast stochastic recently generated a crossover sell signal on the upper end of the neutral range and continues to accelerate lower. The current reading on the fast stochastic is 17, below the oversold trigger level of 20 which could foreshadow a correction. 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. The MACD histogram also generated a crossover sell signal. The index sliced through the zero-index line. The histogram has a negative trajectory that points to lower prices.

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US Consumer Spending Rose More than Expected

US Consumer spending, rose 1.4% in September after gaining 1% in August, according to the Commerce Department. Expectations were for consumer spending rising 1% in September. Personal income rose by 0.9% in the month, exceeding expectations of a 0.4% increase. Income dropped 2.7% a month earlier.

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