Gold Price Prediction – Prices Rise as Yields Decline Ahead of Jobs Report

Gold prices moved higher attempting to break out above the October highs on the last day of the month. This comes ahead of Friday’s jobs report. Expectations are for a number south of 100K due to the strike at GM. The EU reported preliminary Q3 GDP that came slightly less than expectations. EU inflation also fell to the lowest level in the past 2-years. The dollar moved lower on Thursday despite stronger than expected GDP data and ADP private payrolls which were both released on Wednesday.

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Technical Analysis

Gold prices moved higher attempting to test resistance levels near the October highs at 1,519. Support on the yellow metal is seen near the 10-day moving average at 1,495. Additional support is seen near the 100-day moving average at 1,468. Short term momentum whipsawed into positive territory as the fast stochastic generated a crossover buy signal. The fast stochastic is printing in the middle of the neutral range. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index recently 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 is printing in the black with an upward sloping trajectory that points to higher prices.

EU GDP and Inflation Were Soft

Eurozone preliminary Q3 GDP came in slightly less than expected at 1.1% year over year vs. 1.2% in Q2.  Headline inflation fell as expected to 0.7% year over year which was the smallest since November 2016.  These readings show that the eurozone is experiencing slowing growth and falling inflation.   Recent PMI readings suggest that the economy is stabilizing, but it is clearly still far from improving.