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Gold Price Prediction – Gold Rallies as Yield Curve Flattens

By:
David Becker
Updated: Dec 28, 2021, 14:35 UTC

The 2-year yield continues to rise hitting a 21-month peak

Gold Price Prediction – Gold Rallies as Yield Curve Flattens

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Gold prices moved higher on Tuesday, rising for the 4th consecutive day and participating in the risk-on rally. The U.S. yield curve continued to flatten, with the 2-year hitting a 21-month high while the 10-year yield eased. There continues to be a shortage of data released in the U.S. until later this week. The cancelation of thousands of air flights in the United States provided the backdrop of a safe-haven bid on gold prices. Additionally, Apple is closing its stores in New York City. Goldman Sachs requires vaccinations for all employees, which shows a renewed concern for the new COVID variant.

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Technical Analysis

Gold prices rallied for a 4th consecutive trading day, pushing to fresh December highs and blowing past the old December highs, which is now short-term support near $1,815. Additional support is seen near the 50-day moving average at $1,800. Resistance is seen near a downward sloping trend line at $1,857.  Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Prices are overbought as the fast stochastic prints a reading of 87, 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. 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.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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