Gold prices eased on Friday closing the month up 8%. Geopolitical fears helped the yellow metal remain buoyed through the latter portion of the summer. US consumer spending rose July, putting off fears of a contraction and lifting the US dollar to fresh highs. Households bought a range of goods and services, which could further reduce fears of a recession.
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Gold prices moved lower on Friday easing ahead of the long US holiday weekend. Short-term resistance is seen near the August highs at $1,555. Support on the yellow metal is seen near the 10-day moving average at 1,519. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs 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 declining trajectory which points to lower prices.
Consumer Spending Rose More than Expected
The Commerce Department reported on Friday that consumer spending, which accounts for more than two-thirds of US economic activity, rose 0.6% last month after an unrevised 0.3% gain in June. Expectations had been for consumer spending to rise by 0.5% last month. The report added to trade and inventory data in suggesting that while the economy was slowing, the trajectory of the declines were slow. The economy is largely losing speed as the stimulus from the White House’s $1.5 trillion tax-cut package and a government spending blitz fades. The US.-China trade conflict has weighed heavily on manufacturing and business investment, which contracted in the second quarter.
This article was originally posted on FX Empire
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