Gold Price Prediction – Prices Rebound but Remain Rangebound

Gold prices moved higher on Monday, as the dollar restarted its downtrend following a respite on Friday. US yields were nearly unchanged following the larger than expected increase in non-farm payrolls. Traders are re-examining the number released by the Labor Department especially the information surrounding workers than were furloughed.

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Technical analysis

Gold prices rebounded on Monday after dropping sharply on Friday as the yellow metal closed down nearly 3% for the week. Prices rebounded back to resistance which was former support seen near the 50-day moving average at 1,699. Target support is seen near the 100-day moving average at $1,644. Short term momentum has flipped flop and turned positive as the fast stochastic generated a crossover buy. The current reading on the fast stochastic is 28, just above the oversold trigger level of 20. Medium-term momentum remains negative as the MACD (moving average convergence divergence) histogram prints in the red with a downward sloping trajectory which points to lower prices.

Issues with Unemployment Rate

The non-farm payroll report showed a surprise increase in the number of jobs created. The U.S. leisure and hospitality industry, posted an eye-popping rebound in May with a net addition of more than 1.2 million jobs, by far the largest one-month increase in the sector’s history. While the number of payrolls was fantastic, there was a concern with the calculation on the unemployment rate. Currently, the Labor Department has not counted temporarily laid-off workers who believe they are going back to work. These furloughed workers if counted would bring the unemployment rate to 20% from the current reading of 13%.