Gold Price Prediction – Prices Ease Following Strong US Data

Gold prices moved lower on Friday as the dollar gained traction following the stronger than expected revision to Q3 US GDP. US yields moved higher following both the GDP report and the US durable goods orders report which showed an unexpected increase in items that last more than 3-years. Stronger yields led to a rise in the greenback paving the way for lower gold prices. With hedge funds betting on gold prices moving higher, according to the latest commitment of trader’s report, prices are vulnerable to a long liquidation.

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Technical Analysis

Gold prices eased on Wednesday ahead of Thursday’s US Thanksgiving holiday. Prices reversed Tuesday’s rally and are poised to test support seen near the November lows at 1,443. A breakdown below this level would lead to a test of the August lows at 1,400. Resistance is seen near the 10-day moving at 1,465. Additional resistance is seen near the 50-day moving average at 1,487. Short term momentum is neutral to negative and has consistently reversed multiple times as prices have moved sideways to lower. The signal line and the fast stochastic are equal which points to consolidation. Medium-term momentum is negative as the MACD (moving average convergence divergence) histogram is accelerating lower printing in the red with a downward sloping trajectory which points to lower prices.

US GDP Grew More than Expected

US GDP expanded slightly more than expected rising 2.1% during the Q3. Despite the moderate growth there are economists say that believe that growth slowed in the Q4. The Commerce Department reported that Q3 growth rate in the gross domestic product, exceeded its initial estimate of a 1.9% rate. Despite this better than expected GDP has slowed from the robust growth seen in the Q1 of 3.1% year over year. Expectations are for Q4 growth to grow by only 1%.