Gold Price Prediction – Gold Rallies as the Dollar Eases

Gold prices moved higher on Monday as the dollar eased slightly. U.S. yields were mixed as the 2-year continued to climb, flattening the term structure of the U.S. yield curve. Most European markets were closed on Monday due to the celebration of Boxing Day. The cancelation of thousands of air flights in the United States provided the backdrop of a safe-haven bid on gold prices.

Technical Analysis

Gold prices rallied for a third consecutive trading day and are poised to test the December highs at $1,815. Support is seen near the 50-day moving average at $1,800 Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Prices are overbought as the fast stochastic prints a reading of 97, above the overbought trigger level of 80. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. The MACD histogram is printing in positive territory with an upward sloping trajectory which points to higher prices.

Seasonals Point to Mixed Picture

Historically, the movements of gold prices in December are mixed. Over the past 10-years gold prices have increased 50% of the time for an average loss of 0.1%. Gold has outperformed over the past 5-years. A seasonality study of gold prices shows that the yellow metal has increased 80% of the time in December for an average gain of 3%.