Gold Price Prediction – Prices Rise as the Dollar Falls Following US PPI Report

Gold prices edged higher but consolidated below resistance levels. The US dollar moved lower on Friday, paving the way for higher gold prices. US yields edged higher, following a slightly higher than expected US producer price report. US consumer sentiment declined as republicans were more upset about the election than Democrats were happy.

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Technical analysis

Gold prices edged higher near support levels which coincides with the September lows at 1,848. Resistance is seen near the 10-day moving average at 1,897 and then the 50-day moving average at 1,908. Short-term momentum is neutral but the fast stochastic generated a crossover buy signal. The fast stochastic has stopped accelerating lower and is currently printing a reading of 21, just above the oversold trigger level of 20 which could foreshadow a correction. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).

US PPI Rises

The Labor Department said its producer price index climbed 0.3% in October, driven by more expensive food and gasoline, after rising 0.4% in September. It was the sixth straight monthly increase in the PPI. A 0.5% increase in the price of goods accounted for nearly 60% of the gain in the PPI. Goods rose 0.4% in September. On a year over year basis, the PPI advanced 0.5% after rebounding 0.4% in September. Economists had forecast the PPI would rise 0.2% in October and increase 0.4% on a year-on-year basis.