Gold Price Prediction – Gold Prices Face Downward Pressure as the Dollar Rallies 

Key Insights

• Gold prices fell due to heightened risk-off sentiment. 
• The latest CPI data indicated that Inflation will remain elevated.
• Treasury yields pulled back amid the sell-off in equities.

Gold prices face selling pressure as investors pile into the dollar as a safe-haven asset. Hot inflation data generated greater risk-off sentiment in the market. The dollar moves higher as investors pile in for the greenback’s safe-haven appeal.

Benchmark yields moved lower as investors rotated into bonds and sold equities following hot inflation data. The ten-year yield dropped 7 basis points today. 

This week, initial jobless claims rose by 1,000 to 203,000 from last week’s revised level of 202,000. The reading is consistent with the tight labor market. Job openings and quits rates are at a record high as workers are compelled to look for better opportunities. 

The latest CPI data signals that rising inflation is a concern for the Fed. The CPI came in at 8.3%, which was firmer than expected. However, the reading was still below the March reading of 8.5%. The reading supports the Fed’s plan to more aggressively tighten rates due to mounting inflation pressures.

Technical Analysis

Gold prices break below the 200-day moving average of 1836 and face downward pressure that can send gold prices down towed 1800. Support is seen near the 200-day moving average at 1,836. Resistance is seen near the 10-day moving average of 1,874. 

Short-term momentum is negative as the Fast Stochastic generated a crossover sell signal. Prices are oversold as the fast stochastic prints a reading of 9.79 below the oversold trigger level of 20.

Medium-term momentum has turned negative as the MACD generates a crossover sell signal. This occurs as the 12-day moving average minus the 26-day moving average crosses below the 9-day moving average of the MACD line.

The  MACD (moving average convergence divergence) histogram has a negative trajectory that points to lower prices.