Gold Price Prediction – Gold Rallies as the Dollar Continues to Slide

Gold prices continued to rally on Wednesday as the dollar continued to head south. US yields moved lower following weaker than expected US retail sales and commentary from the Federal Reserve following their December Monetary Policy Committee Meeting.

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Technical analysis

Gold prices traded higher but failed to push above resistance near the 50-day moving average near 1,872. Support on the yellow metal is seen near the 10-day moving average at 1,847, which is now seen as support. Additional support is seen near an upward sloping trend line that comes in near 1,781.  Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Medium-term momentum is positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory which points to higher prices.

Fed Remains Dovish

The Fed delivered dovish commentary, saying it would continue to buy at least $120 billion of bonds each month until further progress has been made toward the Committee’s maximum employment and price stability goals. The Fed already had committed to not raising rates until inflation exceeds its 2% goal even if unemployment comes down to levels that generally had signaled price pressures. Changing the language around the asset purchases underlines the central bank’s commitment to seeing the recovery through from its coronavirus-era slump.