Gold Price Prediction – Gold prices extend gains on weak jobs data

Key Insights

  • Gold prices move higher as a safe-haven asset.
  • Jobless claims indicate slower economic growth.
  • Treasury yields dropped on weak jobs data.

Gold prices traded higher as the dollar and yields pullback. Gold prices due to their safe-haven appeal to investors given the mirky economic sentiment.

The dollar retreats on weaker-than-expected jobs data. Benchmark yields slid as investors pour into bonds amid the market sell-off. The ten-year yield slid by 7 basis points today. 

Jobless claims unexpectedly rose last week to their highest levels since January. Initial claims increased to 218,000, rising by 21,000 from the previous week. However, continuing claims dropped to 1.32 million, the lowest level since 1969.  

The Fed’s plans to aggressively tighten rates to rein in inflation can reduce the tightness of the labor market. There might be an uptick in demand compared to job supply as higher interest rates reduce demand for labor.

Technical Analysis

Gold prices extend gains above the 200-day as inflation switches to neutral bias from its negative outlook. Gold prices reclaimed the 200-day moving average of 1838, but a close above this level is needed to solidify its neutral position. Support is seen near the 200-day moving average near 1838.

Resistance is seen near the May 12th high of 1858. Short-term momentum is positive as the Fast Stochastic might generate a crossover buy signal. Prices are no longer oversold as the fast stochastic prints a reading of 42.10 above the oversold trigger level of 20. 

Medium-term momentum turns positive as the MACD might generate a crossover buy signal. This occurs as the 12-day moving average minus the 26-day moving average crosses below the 9-day moving average of the MACD line.

The  MACD (moving average convergence divergence) histogram has a negative trajectory that points to lower prices.