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Gold Price Prediction – Gold Forms Doji Day Despite Risk Off Environment

David Becker
Gold Price Prediction – Gold Forms Doji Day Despite Risk Off Environment

Gold prices have held up remarkably well in the face of a dollar rally that has been spurred on by geopolitical risks. The Turkish Lira lost 13% against the greenback on Friday as investors turned tail. President Eurogon, has been outspoken and refused to let his central bank raise interest rates which need to occur to stabilize the currency.  In line inflation was released in the U.S. on Friday, but it was the large increase in year over year core CPI seen in the past decade. Wage inflation has yet to seep into CPI

Technicals

Gold prices whipsawed initially moving higher as a potential contagion in Europe generated a risk off trade. Stock prices tumbled but the rally in the dollar capped any upside movement in the yellow metal. Resistance remains near the 10-day moving average at 1,213. Support is seen near the August lows at 1,206. Additional support is seen near the July 2017 lows at 1,204.  Momentum is positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory which points to higher prices. The fast stochastic continues to rise from oversold territory which also does not point to a further selloff.  Prices generated a doji day where the close and open were at the same level. This suggests indecision.

Core Inflation Hits Decade High

The U.S. CPI was released on Friday by the Labor Department showing that consumer inflation rose 0.2% m/m and 0.2% m/m  ex-food and energy.  Annualized CPI increased by 2.9% in line with expectations. The ex-food and energy component hit a decade high rising 2.4% y/y. This comes on the heels of a weaker than expected PPI which was released by the BLS on Thursday.  Energy dragged on producer inflation while CPI was buoyed by used vehicle sales. Wage inflation remains stable and has yet to seep into CPI.

This article was originally posted on FX Empire

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