Gold Price Prediction – Gold Tumbles following Strong IP
Gold prices tumbled on Friday as the dollar gained traction, following a stronger than expected US industrial production report. The better than expected number pushed the 10-year yield back to 2.79% up from 2.75%. The 2-year yield also increased to the highest level in January which buoyed the greenback putting downward pressure on gold. The dollar railed across the spectrum but surged against the yen.
Technical Analysis
Gold prices dropped and held mid-day near the 20-day moving average seen near 1,282. A break of this level would lead to a test of the 200-day moving average at 1,248. Momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occur 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). The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices. The fast stochastic also generated a crossover sell signal. The trajectory of the fast stochastic is pointing to accelerating negative momentum. The current reading of 61, is in the upper portion of the neutral range.
Industrial Production Was Stronger than Expected in December
Industrial production, came out better than expected in December increasing to 0.3% in December from the prior month, according to the Federal Reserve. Expectations were for Industrial Production to rise 0.2% month over month. Output at U.S. factories, which accounts for the bulk of the nation’s total industrial output, grew 1.1% last month, the biggest gain since February 2018.Production of appliances, clothing, and paper items also ramped up. On a year over year basis, industrial production rose 4% in December, while capacity utilization, which reflects how much industries are producing compared with what they could potentially produce, rose by 0.1% point to 78.7% in December.
This article was originally posted on FX Empire
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