Gold Price Prediction – Prices Tumble Slicing Through Support

Gold prices broke down on Thursday slicing through trend line support, as the dollar gained traction but U.S. yields eased. This followed a larger than expected decline in U.S. jobless claims ahead of Friday’s employment report. Separately, Q4 productivity fell 4.8% at an annualized rate, worse than the estimate for a 2.8% drop, while unit labor costs rose 6.8%, above the 5% estimate. Higher unit labor costs will eventually lead to inflation which will help buoy yields and the dollar and weigh on gold prices.

Trade gold with FXTM

Technical analysis

Gold prices broke down on Thursday slicing through trend line support and poised to test target support near the November lows at 17,64. Resistance is seen near former support which his the upward sloping trend line that comes in near 1,823. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index 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).

Jobless Claims Fall More than Expected

Jobless claims fell more than expected last week though U.S. employment gains remain sluggish. Initial unemployment insurance claims totaled 779,000 for the week ended January 30, according to the Labor Department. That was below the 830,000 estimates. The reading was the lowest since November 28 as the U.S. economy continues its slow recovery from the Covid-19 pandemic. Continuing claims also continued to drift lower, falling 193,000 from the previous reporting week to 4.6 million.