Gold Price Prediction – Prices Reverse Lower Following Strong Core CPI

Gold prices reversed course on Thursday moving lower following a stronger than expected US CPI report which buoyed the dollar paving the way for lower gold prices. This came despite a second testimony from Fed Chair Gerome Powell who reiterated his thoughts that the US was facing headwinds and that a rate cut in July was likely.

Technical Analysis

Gold prices moved lower reversing Wednesday’s gains, but prices made a higher high and a higher low which is a sign of an uptrend. Support on the yellow metal is seen near the 10-day moving average which comes in near 1,406. Resistance is seen near the July highs at 1,438. Short term momentum is negative as the fast stochastic accelerates lower. Medium term momentum is also neutral to negative as the MACD (moving average convergence divergence) histogram prints in the red with a downward sloping trajectory which points to lower prices.

Inflation Rises to a 18-month High

US consumer prices increased to an 18-month high in June amid solid gains in the costs of a range of goods and services. According to the Labor Department the headline consumer price index CPI edged up 0.1% last month, held back by cheaper gasoline and food prices. Expectations were for CPI to remain unchanged in June and rising 1.6% year-on-year.The CPI rose 0.1% in May. It increased 1.6% year-on-year in June after rising 1.8% in May. Excluding the volatile food and energy components rose 0.3% last month. That as the largest increase since January 2018 and followed four straight monthly gains of 0.1%. The so-called core CPI was boosted by strong increases in the prices for apparel, used cars and trucks, as well as household furnishings. There were also increases in the cost of healthcare and rents. In the 12 months through June, the core CPI climbed 2.1% after advancing 2.0% in May.