Gold Price Prediction – Prices Tumble as Safe-haven Bid Evaporates

Gold prices reversed course sharply on Thursday following news that China and the US would come back to the negotiating table in October. US yields moved sharply higher, following a report from ADP that showed that private payrolls grew more than expected. The safe-haven bid was taken out of precious metals which paved the way for lower gold prices. Jobless claims grew in line with expectations ahead of Friday’s government payroll report. Trade developments between the world’s two biggest economies have spurred volatility. The impending talks rekindled hopes for progress after the two countries recently escalated tensions with fresh tariffs, which eased safe-haven concerns.

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Technical Analysis

Gold prices tumbled from a 6-year high dropping 2.2% and slicing through support which is now seen as short term resistance at 1,533. Support is seen near the 50-day moving average at 1,463. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. This is a sharp change in the fast stochastic, which likely means the change in momentum was unexpected, but the number of crossover signals recently tells you the that market is choppy. Medium-term momentum is negative as the MACD histogram is printing near the zero index level with a downward sloping trajectory which points to lower prices.

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ADP Private Payrolls Rose More than Expected

Private payrolls surged by 195,000 in August, according to ADP, which was above expectations and at a time when fears have been growing about a looming recession. Economists surveyed had been looking for a gain of just 140,000 following July’s 142,000, which was reduced downward by 14,000 from the original count. August’s growth was the best showing since the 255,000 added in April. Most of the gains were in the service sector with nearly 100,000 of the new jobs coming in education and health services and leisure and hospitality industries. Health care and social assistance was the fastest-growing sub-component, with 45,000 positions added.