Gold Price Prediction – Prices Rise on Dollar Weakness

Gold prices moved higher as riskier assets gained traction and the greenback moved lower. Yields in the US rose following strong gains in European yields following a stronger than expected EU retail sales report. Eurozone reported August retail sales jumped 4.4% , nearly double the consensus 2.5%.  The annualized rate rose to 3.7% year over year versus. 2.2% consensus and was the strongest reading since November 2017. This helped buoy the Euro and paved the way for higher gold prices.

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Technical analysis

Gold prices rallied on Monday bouncing near support at the 10-day moving average at 1,887. Resistance is seen near the 50-day moving average at 1,945.  The 10-day moving average crossed through the 50-day moving average which means a short-term downtrend is in place. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) 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. Short-term momentum has turned positive as the fast stochastic recently generated a crossover buy signal. The current reading on the fast stochastic is 46, rebound from the oversold trigger level of 20 which is a sign of accelerating positive momentum.

US Services PMI Rises

The September US Services Purchasing Managers’ Index conducted by Markit came in at 54.6 percent, down 0.4 from the final August estimate of 55.0. The consensus was for 54.6 percent. New orders for services grew at an increased rate in September, putting additional pressure on operating capacity and fuelling another robust rise in employment.