Gold Price Prediction – Prices Rally on Weak Factory Orders Data
Gold prices continued to rise on Monday which was a mixed risk session following Friday’s risk off trading session. The US dollar surged higher after closing lower for 6-consecutive trading session. US yields were mixed with the two year slightly lower and the 10-year slightly higher. The move follows a softer than expected Factory Orders report for March.
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Technical analysis
Gold prices rose for the second consecutive trading session. Gold was able to bounce at short term support near the 20-day moving average which is seen as support near 1,699. Resistance is seen near the 10-day moving average at 1,709. Target resistance is the April high at $1,747.
Short term momentum remains negative as the fast stochastic recently generated a crossover sell. The current reading on the fast stochastic is 45, which is in the middle of the neutral range. The MACD (moving average convergence divergence) index recently generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day trading crosses below the 9-day moving average of the MACD line. The MACD histogram is printing in the red with a declining trajectory which points to negative medium-term momentum.
US Factor Orders Decline
The Commerce Department on Monday reported that US factory orders posted a record drop in March. New orders for manufactured goods fell 10.3% from February to $445.8 billion in March, the biggest month-to-month fall in records dating to 1992. Orders for aircraft, autos and oil field machinery all declined. Net aircraft orders collapsed as airlines canceled contracts with Boeing. New orders for motor vehicles fell 6.7%, and those for mining and oil field machinery fell 7.2%. Excluding the volatile transportation sector, overall manufacturing orders were down a more modest 3.7%. New orders for nondefense capital goods excluding aircraft were down just 0.1%.