Gold Price Prediction – Prices are Poised to Rally as the Dollar Sells Off

Gold prices edged higher on Thursday after attempting to break out but falling to hold fresh highs. This comes despite a large than expected increase in jobless claims that show that the US is headed toward a recession. Riskier assets continued to gain traction across the spectrum with stocks rising significantly for a third consecutive trading session after the US Senate agreed to a bill. US yields moved lower across the curve. The dollar tumbled declining by nearly 1,5% against a basket of currencies with most of the losses coming against the Euro. Surprisingly gold prices did not break out.

 

 

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Technical Analysis

 

Gold prices edged higher on Thursday making a higher high and a higher low. Target resistance on the yellow metal is seen near the March highs at 1,700. Support is seen near the 50-day moving average at 1,587. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal. The fats stochastic surged from a level of 13 last week to 68, which reflects accelerating positive momentum. Medium-term momentum has also turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram also generated a crossover buy signal, moving through the zero-index level. The trajectory is upward sloping which points to higher prices.

Jobless Claims Surge More than Expected

Jobless claims surged as the Labor Department reported that initial claims rose to 3.28 million. The number shatters the Great Recession peak of 665,000 in March 2009 and the all-time mark of 695,000 in October 1982. Consensus estimates showed an expectation for 1.5 million new claims.