Gold Price Prediction – Prices Trend Lower as Momentum Remain Negative

Stronger than expected U.S. manufacturing data combined with comments from the ECB’s Lane about creeping inflation allowed the greenback to continue to advance putting downward pressure on the yellow metal. Prices continue to trend lower after breaking down through trend line support that now coincides with the 10-day moving average which is now seen as resistance at 1,271.  Target support on gold prices is seen near the December lows at 1,236.  Momentum is negative as the MACD (moving average convergence divergence) histogram prints in the red with a downward sloping trajectory which points to lower prices for the yellow metal. The fast stochastic generated a crossover sell signal in oversold territory which reflects accelerating negative momentum. The only caveat is that the fast stochastic is printing a reading of 6, well below the oversold trigger level which could foreshadow a correction.

ECB’s Lane Said Inflation is Recovering Slowly

ECB’s Lane said Inflation is recovering slowly but currently close to target with an HICP of 1.9% in May. Still, the Irish central bank head added that while the ECB is “increasingly confident” that its policy is working, it is still below target and continued policy is needed. The ECB officials eager to stress that monetary policy will remain accommodative, even as the central bank is phasing out its net asset purchases at the end of the year.

U.S. Durable Goods Orders Edged Higher

U.S. durable goods, which ware items that are expected to last for more than 3-years declined by 0.6% in May as demand for both equipment and transportation declined 1%, dropped 0.6 percent in May as demand for transportation equipment fell 1.0 percent. The Commerce Department reported that non-defense capital goods excluding aircraft, which is a proxy for business investment dipped 0.2%.  Yields edged lower in Europe more than the U.S. increasing the yield differential which buoyed the greenback putting pressure on gold.