Gold Price Prediction – Prices Rebound from Session Lows Following Soft US CPI

Gold prices consolidate ahead of trade deal signing
David Becker

Gold prices rebounded from session lows, closing nearly unchanged for the day as traders rejected prices at lower levels. The EUR/USD moved sideways and US yields declined following a slightly softer than expected US CPI report. Geopolitics has moved to the sidelines as trader’s turned their focus to the US-China trade deal which might be the impetus for a selloff in riskier assets as trader’s sell the fact.

 

 

 

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Technical Analysis

Gold prices rebounded from session lows closing the session nearly unchanged. Prices cut through the  10-day moving average which is prior support and now short term resistance near 1,550. Target resistance is now seen near the January highs at 1,611.  Support on gold prices is seen near the November highs at 1,517. Prices appear to holding in just above the most recent breakout level and forming a bull flag continuation pattern on a weekly basis.

While short term daily momentum is negative as the fast stochastic is also accelerating lower. The daily MACD is poised to generate a crossover sell signal, as the MACD line fast approaches the MACD signal line. The MACD histogram is poised to slice through zero index level which is also considered a crossover sell signal.

CPI Rose Less than Expected

The Labor Department reported that CPI Rose 0.2% in December month over month after climbing 0.3% in November. Expectation were for US CPI to rise by 0.3% month over month. The monthly increase in the CPI has been slowing since jumping 0.4% in October. December CPI rose 2.3%, year over year which was in line with expectations. That was the largest increase since October 2018 and followed a 2.1% gain year-on-year in November. The CPI accelerated 2.3% in 2019, the largest rise since 2011, after increasing 1.9% in 2018.

Excluding food and energy CPI edged up 0.1% after climbing 0.2% in November. The core CPI was up by 0.11% last month compared to 0.23% in November.

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