Gold Price Prediction – Prices Consolidate Following Strong Payroll Gains

Gold prices continued to remain buoyed after rallying on Thursday following the Fed’s interest rates decision. For the week gold has increased by 3.9%. The dollar declined to 2-month lows and yields moved higher. US yields moved higher but this barely impacted gold following a stronger than expected US employment report.

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Technical analysis

Gold prices consolidated Thursday’s gains as gold finally broke out of a tight range. Support on the yellow metal is seen near the 50-day moving average at 1,913, and then the 10-day moving average at 1,904. The 10-day moving average is poised to cross above the 50-day moving average which would mean a short-term uptrend was in place. Short-term momentum is positive as the fast stochastic continued to accelerate higher. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices.

Payrolls Rise More than Expected

US nonfarm payrolls increased by 638,000 according to the Labor Department. This is compared to a 530,000 increase expected. The unemployment rate was at 6.9%, compared to expectations that it would be edged down to 7.7%. The September level of 7.9% was unchanged. The decline in the unemployment rate came despite an uptick in the labor force participation rate that rose 0.3 percentage points to 61.7%. An alternative measure that includes discouraged workers and those holding part-time jobs for economic reasons also fell, to 12.1% from 12.8% a month ago.