Gold Price Prediction – Prices Rise Rebounding Despite Strong CPI Data

Gold prices moved higher rebounded from Tuesday wipeout which saw the yellow metal tumbled nearly 6%. Prices hit 1,862, before rebounding during the European session and closing in North America up 1.3% on the day. The dollar moved lower which helped buoy the yellow metal despite a rally in US yields in the wake of the larger than expected US CPI report.

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Technical analysis

Gold prices rebounded after falling down to 1,862, closing the session up 1.3%. Resistance is seen near the 10-day moving average at 1,993. Target support is seen near the 50-day moving average at 1,830. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 68. The move from overbought to neutral reflects accelerating negative momentum. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell 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). The MACD histogram is printing in the red with a declining trajectory which points to accelerating negative momentum.

CPI Rises More than Expected

The US consumer price index rose by 0.6% rise in June, matching the increase seen in May. The uptick was about twice what economists expected. The increase was drive by a rise in gasoline prices. Gasoline prices rose 5.3% from June to July but are down 20.3% on a year over year basis. Food prices dipped 0.4%, the first drop since April 2019. Grocery prices dropped 1.1% while the cost of dining out rose 0.5%. Excluding volatile food and energy prices, CPI surged 0.6% last month from June, which was the biggest monthly increase since January 1991. Still, core inflation is only up 1.6% from a year earlier.