Gold Price Prediction – Gold Hits Fresh 8-year Highs on Strong CPI Report
Gold prices moved higher closing at fresh 8-year highs. The dollar moved lower on and continues to experience downward pressure which is helping to buoy the yellow metal. The 10-year US treasury yield was stable and continues to hover near 63-basis points. Stronger than expected inflation figures released in the US on Tuesday helped buoy gold prices as investors looked for hard assets as a way to protect against higher inflation.
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Technical Analysis
Gold prices pushed higher and closed at a fresh 8-year high. Prices are now poised to test target resistance near the August 2011 highs at $1,921. Support is seen near the 10-day moving average at 1,792 and additional support is seen near the 50-day moving average at 1,741. Short term momentum has turned positive as the fast stochastic reversed generating a crossover buy signal. The current reading on the fast stochastic is 79, which is just below the overbought trigger level of 80. Medium-term momentum remains positive as the MACD (moving average convergence divergence) histogram prints in the black but the upward movement is decelerating which points to consolidation.
Consumer Prices Rise to an 8-Year High
U.S. consumer prices increased to an eight-year high in June. The Labor Department reported on Tuesday that its consumer price index increased 0.6% last month, the biggest gain since August 2012, after easing 0.1% in May. The increase, which ended three straight months of declines, was driven by rises in the prices of gasoline and food. On a year over year basis, CPI climbed 0.6% after gaining 0.1% in May. Expectations had been for CPI to increase by 0.5% in June.