Gold Price Prediction – Prices Ease Following Record Jobs Report

Gold prices moved lower on Friday as the dollar eased and yields were mixed. While the decline in the US 2-year yields to 40-year lows helped buoy the yellow metal, traders appear to have take profits ahead of the weekend. Gold continues to trade in a medium-size range but is in the process of forming a weekly bull flag pattern which is a pause that refreshes higher.

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Technical Analysis

Gold prices eased and were unable to build on Thursday’s rally. The short-term trend is moving downward as the 10-day moving average slipped through the 20-day moving average. Prices both the 10 and 20-day moving average which is former resistance now support seen near the  10-day moving average 1,703. Target resistance is seen near the April highs at 1,747. Additional support is seen near an upward sloping trend line that comes in near 1,674. The weekly chart of gold prices is forming a bull flag pattern which is a pause that refreshes higher.

Short term momentum on gold prices has turned positive as fast stochastic generated a crossover buy signal in the middle of the neutral range. This follows a day where the fast stochastic generated a sell signal which is likely a signal of further consolidation. Medium-term momentum is negative as the MACD (moving average convergence divergence) histogram is printing in the red with a downward sloping trajectory which points to lower prices.

The Jobs Data was Historic

US Labor Department reported at historical employment number that showed a record of 20.5 million people lost their jobs in April, a monthly record. The unemployment rate soared to 14.7%. A silver lining was that 90% of the people that were laid off believe their layoff is temporary. The record-setting number was a function of the stay home orders that were issued by governors throughout the United States. All non-essential businesses were asked to close across most of the country. The Labor Department did not count those who considered themselves furloughed. If the furloughed people that do not know if they will get their jobs back were counted the unemployment rate would be above 19%.