Gold Price Prediction – Prices Rise But are Capped by a Stronger Dollar

Gold prices moved higher, bouncing from support but closing below short-term resistance. Gold faces headwinds as the dollar rallied sharply. U.S. Yields moved lower, but yields outside the United States declined even faster, which buoyed the greenback. There was a deluge of economic data released on Wednesday, including ADP private payrolls and Chicago PMI.

Technical analysis

Gold prices moved lower but bounced from support near an upward sloping trend line near $1,762. A break of this level would lead to a test of target support near an upward sloping trend line that comes in near $1,733.  Resistance is seen near the 10-day moving average at 1,774.  The 10-day moving average has crossed below the 100-day moving average, meaning that a short-term downtrend is now in place. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Prices are oversold. The current reading on the fast stochastic is 12, below the oversold trigger level of 20 which could foreshadow a correction. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) as the MACD (moving average convergence divergence) index generated a crossover sell signal. The MACD histogram is printing in negative territory with a rising trajectory which points to consolidation.

ADP Private Payrolls is Robust

Private payrolls grew faster than expected in June. According to ADP and Macro-Economic Advisors, private payrolls increased by 692,000 and above the 550,000 expected. The May reading of 886,000 was revised down sharply from the initially reported 978,000. The biggest hiring gain came from the 332,000 pickup in leisure and hospitality. Overall, services provided the bulk of the job gains with 624,000, while goods producers added 68,000.