Gold Price Prediction – Gold Edges HIgher but Cannot Break Out

Gold prices moved higher on Thursday, buoyed by a drop in the dollar, as yields pulled back. US 2-year yields hit a decade old high on Wednesday and appear to have pulled back despite robust economic data. The dollar tumbled through support levels giving a boost to commodities like gold that are priced in US dollars.

Technical Analysis

Gold prices edged higher but were unable to push through resistance near the 50-day moving average at 1,307.  Support on the yellow metal is seen near the 20-day moving average at 1,200.  Prices are trading sideways which has pushed the Bollinger band width to the lowest levels seen since June which reflects declining volatility. Short-term momentum has turned positive as the fast-stochastic generated a crossover buy signal. The MACD (moving average convergence divergence) histogram is printing in the black with an upward sloping trajectory which points to higher prices.

Jobless Claims Drop Following Hurricane Florence

The commerce department reported that US Initial jobless claims, fell by 3,000 to 201,000 in the week ended Sept. 15. Expectations were for claims to rise by 4,000. This marks the lowest level since 1969. Continuing claims also declined by 55,000 to 1.65 million. They have fallen to the lowest level since 1973. The drop in jobless claims was mostly attributed to the disruption caused by Hurricane Florence. Since those without jobs were unable to file a claim or pick up checks, the numbers dropped more than expected. The numbers show that the jobs market remains tight and wages are on the rise. This continues to point to the Fed increasing interest rates when they meet later this month.

Housing Starts Rise

The commerce department also reported that US Housing starts increased 9.2% in August fmonth over month to an annual rate of 1.282 million. This rise in building was attributed to multi-family starts. Building permits, were down for multifamily building, a sign that demand continues to cool for apartments and condominiums.