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Gold Price Price Prediction – Prices Trade Sideways as Risk off Fades

By:
David Becker
Published: Oct 29, 2018, 14:04 UTC

Gold prices traded sideways on Monday as the risk off trade abated and stocks moved higher.  Traders now await Fridays Non-farm payroll report which will

Gold Bars and Dollar

Gold prices traded sideways on Monday as the risk off trade abated and stocks moved higher.  Traders now await Fridays Non-farm payroll report which will be the catalyst that drives the value of the dollar and therefore gold.  Consumer spending was slightly stronger than expected, but the inflation component edged lower which helped riskier assets gain traction. The markets continue to be concerned that the Fed will raise rates and generate a recession. The softer than expected inflation outlook could be the catalyst that puts the breaks on the Fed’s monetary policy changes.  The Fed meets on November 8 and could walk back their hawkish rhetoric.

Technical Analysis

Gold prices edged lower on Monday, and continues to trade in a tight range. Support is seen near the 20-day moving average at 1,216, while resistance is seen near the October highs at 1,239.  The 20-day moving average recently crossed above the 50-day moving average which shows that a medium term up trend is in place.  Short term momentum has turned negative as the fast stochastics generated a crossover sell signal in oversold territory which points to accelerating negative momentum.  The MACD is printing in the black with a declining trajectory which points to decelerating negative momentum.

US Consumer Spending Picked Up

US Consumer spending was lifted by increases on health care and autos. The commerce department reported that US consumer spending increased by 0.3% in September while Personal Income increased by 0.2%.  Additionally the Commerce Department revealed that inflation edged lower as the Federal Reserve’s preferred measure of inflation returned to the central bank’s 2% year over year target after been slightly elevated in prior months. In addition, personal incomes rose 0.2% in September the smallest gain since June 2017 and roughly half of that increase was wiped out by inflation. Personal incomte expenditures increased just 0.1% month over month in September.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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