Gold Price Prediction – Prices Tumble as the Dollar Rallies Following Payrolls

Gold prices moved lower on Friday in the wake of the Department of Labor unemployment report. The dollar moved higher, putting downward pressure on the yellow metal. U.S. Treasury yields rose, with the 10-year yield rising more than 5-basis points, generating headwinds for gold prices.

Technical analysis

Gold prices tumbled sharply, breaking through trend line support. Target support is seen near the June lows at 1,750. Resistance is seen near former support at an upward sloping trend line near 1,789. Additional resistance is near the 20-day moving average at 1,808. Short-term momentum has turned negative as the fast stochastic generated crossover sell signal.  Medium-term momentum has turned negative as the MACD (moving average convergence divergence) generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).

Payrolls Rise More than Expected

Nonfarm payrolls rose by 943,000 in July while the unemployment rate dropped to 5.4%, according to the department’s Bureau of Labor Statistics. Expectations were for an 845,000 increase in new jobs and a headline unemployment rate of 5.7%. The drop in the headline unemployment rate looked even more vital considering that the labor force participation rate ticked up to 61.7%, tied for the highest level since the pandemic hit in March 2020.