Gold Price Prediction – Prices Rebound on Strong PPI Report

Gold prices rebounded slightly on Wednesday as the dollar eased paving the way for higher gold prices. US yields moved lower across the curve with the 10-year dropping 3-basis points to 72-basis points. US wholesale inflation figures came out stronger than expected following Tuesday’s CPI report which showed that consumer inflation remains tame.

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Technical analysis

Gold prices rebounded on Wednesday after dropping on Tuesday. Prices recapture short term support is seen near the 10-day moving average at 1,902. Resistance is seen near the 50-day moving average at 1,933. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal on the upper end of the neutral range. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line.  The MACD histogram also generated a crossover buy signal rising above the zero-index line.

US PPI Rose More than Expected

U.S. wholesale prices increased more than expected in September, leading to the first year-on-year gain since March according to the Labor Department. The PPI index rose 0.4% in September after advancing 0.3% in August. PPI increased 0.4% year over year in September after falling 0.2% in August. Expectations had been for PPI to gain 0.2% in September on both a month over month and year over year basis. Core PPI, which excludes food, energy increased by 0.4% in September. Core PPI had increased by 0.3% for three straight months. Core PPI climbed 0.7% year over year. The core PPI rose 0.3% on a year-on-year basis in August.