Gold Price Prediction – Prices Rise on Soft Retail Sales

Gold prices moved higher on Monday and continues to form a bull flag pattern which is a pause that refreshes higher. A weaker than expected retail sales report released by the US Commerce Department on Monday, took some of the strength out of the US dollar paving the way for higher gold prices.

Technical Analysis

Gold prices moved higher forming a bull flag pattern after it broke out on Thursday of last week. Resistance is seen near the July highs at 1,265. Support is seen near the 20-day moving average at 1,200.  The 20-day moving average crossed above the 50-day moving average which shows that a medium term up trend is now in place. Momentum is positive as the MACD (moving average convergence divergence) histogram is printing in the black with an upward sloping trajectory which points to higher prices. The fast stochastic surged higher reflecting accelerating positive momentum.  The current reading of 63, remains below the overbought trigger level of 80.

Retail Sales Edged Higher

US Retail Sales moved higher rising by 0.1% month over month for September.  This compared to expectations that retail sales would increase by 0.6% month over month. The Commerce Department reported that retail sales in September increased by 4.7% year over year. Core retail sales which excludes automobiles, gasoline, building materials and food services, increased by 0.5% in September.

Core Retail Sales in September Remains Very Robust

Robust core retail sales in September pointed to strong consumer spending that should offset anticipated drags on economic growth from a widening trade deficit and persistent weakness in the housing market. Growth estimates for the third quarter are above a 3.0 percent annualized rate. The economy grew at a 4.2% pace in the Q2. Sales at clothing stores rebounded 0.5 percent after tumbling 2.8 percent in August. Online and mail-order sales soared 1.1% in September after rising 0.5% in the prior month.