Gold Price Prediction – Gold Breaks Out of Trend Line Resistance on Dollar Weakness
The dollar tumbles on new stimulus talks
Gold prices broke out above trend line resistance on Friday as the dollar broke down lifting all commodities to higher levels. US treasury yields traded sideways after climbing for most of the week. The White House has announced that it has increased its stimulus target and is preparing a $1.8 trillion coronavirus relief offer, its largest proposal to date. The additional stimulus would weigh on US yields and devaluate the dollar which led to the decline in the greenback paving the way for higher gold prices.
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Technical analysis
Gold prices moved higher rallying 1.65% on Friday as the dollar tumbled. Prices broke through trend line resistance which is now short-term support near recaptured resistance now support near 1,912. Resistance is seen near the 50-day moving average at 1,939. 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 also generated a crossover buy signal rising above the zero-index line. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal in the middle of the neutral range.
White House Increases Stimulus Offer
The White House has announced that it has increased its stimulus target and is preparing a $1.8 trillion coronavirus relief offer, its largest proposal to date. Treasury Secretary Steven Mnuchin is expected to discuss a new $1.8 trillion proposal with House Speaker Nancy Pelosi. The White House proposal marks a further narrowing of the distance between the administration and Democratic leaders over the bill’s overall price tag. Still, its nearly 0.8 trillion of the level that the House of Representatives wants and investors are unsure if a deal will get done ahead of the election.
