Gold Price Prediction – Gold Rallies as the Dollar Eases

Gold prices rose for a second consecutive trading session, and the yellow metal prepares to test higher level. The price action is accelerating higher and poised to test the upper end of a wide range. The dollar index rallied, moved lower on Friday helping gold prices gain traction. Yields were slightly lower, helping to buoy the greenback. Both the 2-year yield and the 10-year yield moved lower. The decline in yields comes despite an uptick in the regional Chicago PMI.

Technical Analysis

Gold prices rallied for a second consecutive trading session. Support is seen near the 10-day moving average at $1,805. Resistance is seen near a downward sloping trend line at $1,867.  The 10-day moving average has crossed above the 50-day moving average which means that a short-term up trend is now in place. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. 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. The 10-day moving average is poised to cross above the 50-day moving average, which means a short-term uptrend could now be in place.

Chicago PMI Shows Robust Uptick

The Chicago Purchasing Managers Index, the last of the major regional indices that are reported ahead of the National ISM manufacturing report, rose to 63.1 in December. This uptick in the total index reverses last month’s decline. Inventories hit a four-year high as firms created buffers for longer lead times.