Gold Price Prediction – Prices Tumble on Strong PPI

Gold prices tumbled on Thursday as the dollar gained traction and US yields moved higher. This comes despite stronger than expected US PPI which came in much stronger than expected. In addition, jobless claims dropped to a 50-year lower allowing the 10-year yield in the US to soar. This paved the way for lower gold prices.

Technical Analysils

Gold prices tumbled on Thursday, diving and removing all the gains experienced this week. Prices were unable to break through resistance levels near the 50-day moving average at 1,306. Gold prices pierced through the 10-day moving average which is now seen as short term resistance at 1,294. Momentum has whipsawed. It recently turned positive with a MACD (moving average convergence divergence) index buy signal. Today’s price action reversed the momentum turning it negative. This occurs when the MACD line (the 12-day moving average minus the 26-day moving average, crossed below the MACD signal line, the 9-day moving average of the MACD line. The fast stochastic also whipsawed creating a crossover sell signal.

Wholesale Prices Rise to 5-Month Highs

The Labor Department reported on Thursday that US PPI rose to a 5-month high, but overall producer inflation remains subdued. The producer price index increased by 0.6% in March, lifted by a surge in the cost of gasoline. Gasoline also spilled over into Consumer prices which were reported by the BLS on Wednesday. That was the largest increase since last October and followed a 0.1% gain in February.

ON a year over year basis, the PPI rose 2.2% after advancing 1.9% in February. Expectations were that  PPI would climb 0.3% in March and increase 1.9% on a year-on-year basis. Core PPI was unchanged last month after ticking up 0.1% in February. The so-called core PPI increased 2.0% in the 12 months through March. That was the smallest annual increase since August 2017 and followed a 2.3% rise in February.