Gold prices edged lower as the dollar traded sideways following a stronger than expected jobless claims report and softer than expected Chinese inflation data. Yields also moved sideways providing little impetus for the future direction of the yellow metal.
Gold prices moved sideways and consolidated near 1,288 just below the January highs which are seen as resistance near ,1298. Target resistance is seen near the June 2018 highs at 1,310. Support on the yellow metal is seen near the 20-day moving average at 1,268. Additional support is seen near the 50-day moving average at 1,242. Negative momentum is accelerating as the MACD index is poised to cross through the zero-index level. The trajectory is negative pointing to lower prices. The fast stochastic is moving sideways reflecting short term consolidation.
Jobless Claims Tumble
The Department of Energy reported on Thursday that jobless claims fell 17,000 to 216,000 for the week ended Jan. 5. Expectations were for claims to fall to 225,000. Claims were boosted in the week ending Dec. 29 as workers furloughed because of a partial shutdown of the U.S. government. The shutdown, has left 800,000 employees furloughed or working without pay. The number of federal employees filing for jobless benefits increased by 3,831 to 4,760 in the week ending Dec. 29. The four-week moving average of initial claims, rose 2,500 to 221,750 last week.
Chinese Economic Data Showed Inflation Eased
China revealed softer than expected inflation data. CPI in December slid to 1.9% year over year from 2.2% in November. Expectations had been for a small decline to 2.1%. PPI, a gauge of wholesale prices in December declined to 0.9% year over year which was the lowest in 2-years. Energy was the main catalyst for the decline as oil prices tumbled in December. CPI was unchanged at 1.8% in December if you take out food and energy. Food and energy prices declined by 1.7% in December from 2.1% in November.