Gold Price Prediction – Prices Rebound Follow Soft Claims Data

Gold prices rebounded on Thursday, ahead of Saturday’s meeting between President Trump and President Xi. Expectations are for the two to agree to restart discussions toward a trade deal. Both sides have cautioned market participants not to get too exuberant.  US jobless claims rose more than expected putting downward pressure on US yields which capped any upward momentum in the dollar allow gold prices to rally.

Technical Analysis

Gold prices rebounded on Thursday after dropping on Wednesday and hitting a 6-year high earlier in the week. Support on the yellow metal is seen near the 10-day moving average at 1,391. Momentum remains positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory which points to higher prices. Prices are overbought. The relative strength index (RSI) surged higher reflecting accelerating positive momentum. The current reading on the RSI is 78, well above the overbought trigger level of 70 which could foreshadow a correction. Prices can remain overbought for an extended period when a breakout such as this one occurs. The fast stochastic generated a crossover sell signal in overbought territory. The currency reading on the fast stochastic is 78, below the overbought trigger level of 80.

Jobless Claims Unexpectedly Rose

Initial claims increased 10,000 to 227,000 for the week ended June 22, according to the Labor Department. Data for the prior week was revised to show 1,000 more applications received than previously reported. Expectations were for close to rise 3,000 to 220,000. Claims could rise further in the coming weeks as auto manufacturers temporarily shut down assembly plants for summer retooling. The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 2,250 to 221,250 last week.