Gold Price Prediction – Gold Rallies as the Dollar Takes a Breather

Gold prices rebounded as the dollar initially slipped from a six-month high. Treasury yields were mixed, but the upward move over the past 2-weeks has buoyed the interest rate differential in favor of the greenback, which has put pressure on gold prices. Since gold is priced in U.S. dollars, a stronger U.S. currency makes gold more expensive in other currencies.

Technical analysis

Gold prices rebounded sharply after falling on Wednesday but still remain in a bear flag pattern. This pattern is a continuation event that pauses before it refreshes lower. Prices are now poised to test target support is seen near the August lows at 1,677. Resistance is seen near the 10-day moving average at 1,755. The 10-day moving average has crossed below the 50-day moving average, which means that a short-term downtrend is now in place. Short-term momentum has reversed and turned positive as the fast stochastic generated a crossover buy signal. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover signal. The MACD histogram is printing in negative territory with a downward sloping trajectory which points to lower prices.

Chicago PMI Beats Expectations

Chicago manufacturing activity representing industrial utilization in the middle of the United States lipped in September to its lowest level in seven months. The Chicago purchasing managers index slowed to 64.7 in September from 66.8 in the prior month but was better than expected. The index has been moderating from a record high of 75.2 in May. Expectations were for a reading of 64.3 in September.