Gold Price Prediction – Prices Trade Sideways Ahead of Mid-Term Elections

Gold prices continue to trade sideways in the wake of the US jobs report and ahead of the US mid-term elections. Last week traders saw that wages increased by more than expected which pushed US yields higher, which raised the value of the US dollar paving the way for lower gold prices. Yields are still on an upward climb which is helping the dollar gain traction. The Average hourly earnings increased by more than 3.1% which makes up 60% of corporate costs.

Technical Analysis

Gold prices attempted to rally touching resistance near the October highs at 1,239. Support on the yellow metal is seen near the 20-day moving average at 1,223. Additional support is seen near the 50-day moving average at 1,208. Momentum is neutral and has whipsawed. The MACD (moving average convergence divergence) histogram is printing near the zero index level with a flat trajectory which reflects consolidation. Prices have been moving sideways since the beginning of August which reflects consolidation. The fast stochastic is looking to generate a crossover buy signal which would signal accelerating positive momentum.

Gold could see a significant move if both the Senate and the House of Representatives turns over to the Democrats. This would generate a lot of volatility for riskier assets, as there would likely be serious investigation into President Trump and increase the likelihood that an impeachment would be successful. Current polling shows that democrats will likely win the house and the senate is up for grabs. There is a lot of anger in the United States, and this mid-term election seems to be a referendum on President Trump.

US job gains and higher wages continue to weigh on gold prices.  Wages increased by 3.1% year over year to the highest in a decade. This in conjunction with higher home prices has been the catalyst for increasing interest rates from the Federal Reserve.