Gold Price Prediction – Prices Rise as Dollar Stabilizes Following Strong Import Prices

Gold prices moved higher on Friday but remain rangebound, unable to pierce through resistance. Inflation data increased for the second consecutive trading session with import prices rebounding more than expected. Recall, US PPI came in stronger than expected to rise 0.4% last month after plunging 1.3% in April, which was the biggest decrease since the Great Recession. Some U.S. states that were largely spared during the early days of the Covid-19 pandemic are now seeing record hospitalizations, which has weighed on riskier assets and buoyed the yellow metal.

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Technical analysis

Gold prices edged higher and remain above trend line support which is now 1,730. Additional support is seen near the 10-day moving average at 1,717 Target support is seen near the 50-day moving average at $1,709. Short term momentum has turned positive as the fast stochastic generated a crossover buy and continued to accelerate higher. The current reading on the fast stochastic is 86, up from 74 yesterday, and above the overbought trigger level of 80 which could foreshadow a correction. 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).

US Import Price Rise More than Expected

The US Labor Department reported that import prices rebounded more than expected in May. Import prices rose 1.0% last month after an unrevised 2.6% drop in April. Expectations had been for import prices, which exclude tariffs, to increase by 0.6% in May.