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Gold Price Prediction – Prices Rise Recapturing Support Following Weaker than Expected ISM

By:
David Becker
Published: Oct 1, 2020, 18:24 UTC

Employment in manufacturing remain in contraction territory

Gold Price Prediction – Prices Rise Recapturing Support Following Weaker than Expected ISM

Gold prices moved higher and recaptured short-term resistance which is now support. The dollar moved lower following the softer than expected ISM manufacturing report. US yields were relatively stable but moved slightly lower giving a boost to the yellow metal.

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Technical analysis

Gold prices moved higher and recaptured resistance which now support near the 10-day moving average at 1,892. 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 is negative but consolidating and poised to turn positive as the MACD (moving average convergence divergence) line is about to crossover 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 38, rebound from the oversold trigger level of 20 which could foreshadow a correction.

ISM Manufacturing Index Edged Lower

The monthly PMI Manufacturing index reported by the ISM (Institute of Supply Management) slid to 55.4% from 56% in August. Expectations had been for the reading to increase to 56.3%. New orders were the main catalyst for the decline dropping by 7.4 points to 60.2% while, production fell 2.3 points to 61%, and employment remained in contraction territory, at 49.6%. Factory employment has been contracting since July 2019, posing a challenge to President Trump and his reelection bid after promising to revive American manufacturing.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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