Gold Price Prediction – Prices Rise but Remain Range bound as CPI Drops

Gold prices moved higher on Tuesday but continues to trade in a tight range. The dollar also moved lower trading sideways which helped buoy the yellow metal. After running up on Monday, US yields gave back some of their gains with the 10-year losing 4-basis points down to 68-basis points and the 2-year also slipping 1-basis points. US consumer prices fell in April notching up the largest drop since 2008.

Technical Analysis

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Gold prices moved higher but continue to consolidate in a tight range. The range is getting tighter and energy is building up. A break either way will release the energy and likely generate a trend. The weekly chart has formed a bull flag continuation pattern which is a pause that refreshes higher. Support is seen near an upward sloping trend line that comes in near 1679. Resistance is seen near a downward sloping trend line that comes in near 1719. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. The trajectory is flat which means that this could glide lower. Medium term momentum is also negative as the MACD (moving average convergence divergence) histogram is printing in the red with a downward sloping trajectory which points to lower prices.

CPI Drops More than Expected

The US Consumer Price Index declined by 0.8% in April as falling oil, weighed on the headline index. Also there were huge declines in air travel, which weighed on travel prices and services. Excluding food and energy core CPI decreased by 0.4%, the largest monthly drop in records dating to 1957. Overall prices were up 0.3% from a year earlier, the lowest since 2015, and core prices were 1.4% higher from a year ago, the lowest since 2011.