Gold Price Prediction – Prices Consolidate Despite Robust Retail Sales
Gold prices edged higher on Tuesday but remain rangebound and were unable to test either support or resistance. The dollar moved higher but the trend remains downward sloping. US yields were mixed, following a much better than expected US retail sales report. US Industrial production came in weaker than expected. US homebuilder confidence came in stronger than expected as low mortgage rates continue to buoy the housing market.
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Technical analysis
Gold prices edged higher but remain above support is seen near the 10-day moving average at 1,715 Target support is seen near the 50-day moving average at $1,712. Short term momentum has turned negative as the fast stochastic generated a crossover sell. The current reading on the fast stochastic is 77, down from 86 which was above the overbought trigger level of 80 which could foreshadow a correction. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing near the zero-index level with a flat trajectory that points to consolidation.
US Retail Sales Comes in Stronger than Expected
Retail sales increased by 17.7% in May, though total spending was down year over year due to the spread of COVID-19. This compared to expectations would rise by about 8%. Retail Sales at restaurants and online, increased 17.7% in May from a month earlier, according to the Commerce Department. U.S. Clothing and accessories stores reported the biggest percentage gain at 188% while sporting goods, hobby, musical instruments and book stores rose 88.2%. After being almost completely shuttered during the lockdown, food services and drinking places saw a 29.1% rebound in May.