Gold Price Prediction – Gold Holds Support but Momentum is Turning Negative

Gold prices were little change on Monday initially attempting to move higher but failing and closing slightly lower. Prices are hovering near support, and Monday’s U.S. retail sales did little to buoy the yellow metal. Later in the week, Fed Chair Powell will testify in front of congress, with expectations of another 25-basis point rate hike baked in for the September meeting. The Eurozone trade balance narrowed as European export growth slowed.

Technicals

Gold prices are hovering just above support near the July lows at 1,236. A close below this level would lead to a test of target support near the July 2017 lows at 1,204. Resistance is seen near the 10-day moving average at 1,250. Momentum is neutral, but turning negative as the MACD (moving average convergence divergence) histogram prints near the zero-index level but is poised to generate a crossover sell signal. With the dollar losing ground the yellow metal is holding steady.

Eurozone trade balance narrowed

Eurozone trade balance narrowed to EUR 16.9 billion, as export growth slowed to a meager 0.2% month over month, while imports rose 0.9% month over month. Unadjusted data showed a surplus of EUR 16.5 billion, down from EUR 19.3 billion in the corresponding period last year, with exports down -0.8% year over year. The correction in exports will add to concerns that the rise in global protectionism is already having an impact on exports and will increasingly limit the room for Eurozone growth going ahead.

Retail Sales Rise and Revisions to May are Strong

U.S retail sales rose 0.5% in June, and are 0.4% higher excluding autos. The 0.8% gain in May autos was revised up to 1.3% with the 0.9% ex-auto figure boosted to 1.4%. Sales excluding autos, gas, and building materials rose 0.2% versus 1.1% previously which was revised from 0.6%. Motor vehicle and parts sales increased 0.9% from 0.8%. Gas station sales were up 1.0% from 3.0%. Health, personal care was up 2.2% from 1.3%. The eating and drinking component was up 1.5% from 2.6%. Non-store retailers rose 1.3% from 0.4%. Sporting goods sales declined 3.2% from -0.9%. And clothing dropped 2.5% from the prior 2.9% gain. This report is all about the upward revisions to May, which made for a stronger than expected release.