Gold Price Prediction – Prices Rise on Declining Unit Labor Costs

Gold prices moved higher on Tuesday for the second consecutive trading session testing resistance levels. This comes as the dollar was nearly unchanged, and US yields remained stable. Bitcoin prices, which have been on a tear and been experiencing a safe-haven bid instead of gold, eased. The labor Department reported that US productivity increased at a less than expected rate while unit labor costs plunged.

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Technical analysis

Gold prices rebounded continued to trend higher, testing resistance near the 50-day moving average at 1,879. Support is seen near the 10-day moving average at 1,824. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal and continues to accelerate higher. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index is poised to create 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).

Unit Labor cost Drop

The Labor Department reported that nonfarm productivity increased at a 4.6% annualized rate last quarter. The slight downward revision from the 4.9% pace estimated last month followed a 10.6% growth rate in Q2, which was the fastest since the first quarter of 1971. Expectations had been for productivity growth to be unrevised at a 4.9% rate in Q3. Hours worked rebounded at a 37.1% rate, rather than the 36.8% rate estimated in November. That followed a record 42.9% pace of decline in Q2. As previously reported, unit labor costs plunged at a 6.6% rate instead of an 8.9% rate. Unit labor costs rose at a 12.3% pace in Q2. They increased at a 4.0% rate from a year ago.