Gold Price Prediction – Gold Prices Fall Sharply as the Dollar Nears Two Decade Highs
- Gold prices rebound after today’s downward swing.
- Rate tightening places downward pressure on rate-sensitive sectors.
- Treasury yields eased as investors wait for hints about Fed monetary policy.
Gold prices recovered in volatile trading after hitting multi-week lows as higher yields and a stronger dollar placed downward momentum. The dollar rallies to two-decade highs as investors long the dollar. Benchmark yields pulled back as investors await economic data. The ten-year yield slid by 3 basis points today.
The Empire State Manufacturing Index came in lower than expected. Investors await this week’s economic data about retail sales for clues about the size of the Fed’s next move. April housing starts will be reported on May 18th, which will signal how rate-sensitive sectors are faring in tightening financial conditions.
Economists expect there to be a decline, but activity should remain elevated. Furthermore, the dollar is strengthening relative to other currencies and is acting as a headwind for economic growth for US companies with foreign earnings.
Gold prices fell sharply as bearish sentiment builds among investors for XAU/USD. Gold prices face downward momentum toward the 1,800 level and are headed toward $1780, which was near the low of today’s trading session.
Support is seen near the late January 2022 lows near 1780. Resistance is seen at the former support level near the 200-day moving average of 1,837.18.
Short-term momentum turns positive as the Fast Stochastic generated a crossover buy signal. Prices remain oversold as the fast stochastic prints a reading of 19.82 below the oversold trigger level of 20.
Medium-term momentum 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.