Yahoo Finance Gold Price Prediction – Gold Sliced Through Support Targeting the $1,200 Region
Gold prices tumbled on Tuesday, as commentary from Fed Chair Powell, allowed the greenback to gain traction. Italian orders and sales were much stronger than expected but failed to offset the gains in the dollar.
Technicals
Gold prices drop sharply on Tuesday slicing through former support which were the July and December lows at 1,236, and headed toward target support near the July 2017 lows at 1,204. Resistance on the yellow metal is seen near former support at 1,236 and then the 10-day moving average at 1,247. 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).
Fed Chair Powell Will Continue to Normalize Rates
Fed Chairman Powell’s Monetary Policy testimony Tuesday did not bring any new information, but the Fed chair did say the inflation was in check. Employment is expected to continue to grow but all this information was released in the Fed minutes from Friday. The Fed’s assessment was an echo of recent FOMC statements and minutes that have shown the FOMC remains on a gradual normalization course for now, and which will be dependent on economic data in the future. The strength in the economy and the rise in inflation, albeit modest, won’t pull the Committee out of its comfort zone, especially as wages remain tame, and with signs that slack remains in the labor force. Powell did give a generic answer on trade tariffs which was the countries that participated in free trade over time grow their economies the most.
Italian Data Was Stronger than Expected
Italian orders and sales much stronger than expected. May data showed industrial orders up 3.6% month over month, after a drop of -0.6% month over month in April. The annual rate still fell back to 4.9% year over year from 7.2% year over year, but the boost over the month, and the fact that sales growth accelerated to 1.7% month over month from 0.2% month over month in April tie in with strong German orders numbers and add to signs that the Eurozone recovery is not dead yet.
This article was originally posted on FX Empire
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