Gold Price Prediction – Gold Consolidates Despite Falling US Dollar

Gold prices edged higher but were unable to pierce through resistance levels despite a weaker dollar, as stronger yields weighed on the price of the yellow metal. As Expected Japan announced a large stimulus package to boost growth as monetary policy has not been able to spur on economic expansion. In the US, jobless claims were stronger than expected decline by 10,000 to the lowest levels seen since mid-April.

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Technical Analysis

Gold prices continued to consolidate on Thursday with gold implied volatility dropping to the lowest levels of the year. Resistance near the 50-day moving average near 1,482. Support is seen near the 10-day moving average at 1,464. Additional support is an upward sloping trend line that comes in near 1,454 and then the November lows at 1,443. Short term momentum remains positive as the fast stochastic generated a crossover buy signal and continues to accelerate higher. The fast stochastic is closing in on the overbought trigger level, but the current trajectory points to higher prices. 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 is printing in the black with an upward sloping trajectory which points to higher prices.

Japanese authorities announced a large stimulus package to boost growth.  The total size was around 26 trillion yen spread out over several years.  While this was on the high end of expectations, actual fresh spending was disappointing.  Prime Minister Abe couched the package in terms of disaster relief, protection against downside economic risks.

Separately, US jobs claims dropped 10,000 to 203,000 for the week ended November 30, the lowest level since mid-April, according to the US Labor Department. Data for the prior week was unrevised. The expectation had been for claims to rise to 215,000 in the latest week.