Gold Price Prediction – Prices Slip on Strong Dollar Gains

Gold prices edged lower and closed near session lows.  The dollar moved higher as yields continued to trend upward, putting downward pressure on the yellow metal. Stronger than expected retail sales helped buoy U.S. Treasury yields which helped the dollar trend higher. Import prices also increased more than expected adding to the recent gains seen in inflation expectations.

Technical analysis

Gold prices consolidated and hovered near the resistance but was unable to break through trend line resistance near a downward sloping trend line that comes in near 1,866. Target resistance is seen near the June highs at 1916. Support is seen near the 10-day moving average at 1,833. The 10-day moving average has crossed above the 50-day moving average, which means a short-term uptrend is now in place. Prices are overbought as the fast stochastic is printing a reading of 81, well above the overbought trigger level of 80. Medium-term momentum has also turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD line). The MACD histogram is printing in positive territory with an upward sloping trajectory which points to higher prices.

U.S. Retail Sales Rise More than Expected

Retail sales, increased 1.7% for October, compared with 0.8% the previous month. Excluding autos, sales also increased 1.7%, according to the Commerce Department. The two numbers were above expectations of 1.5% for the headline print and 1% for the core sales gain. Online shopping posted the biggest relative gain for the month, rising 4% and good for a 10.2% gain from a year ago.