Gold Price Prediction – Prices as the Dollar Drops

Gold prices continued to grind higher as the dollar fell for a second consecutive trading session. Treasury yields were lower, which weighed on the interest rate differential in favor of currencies other than the greenback, which helped has put pressure on gold prices. Since gold is priced in U.S. dollars, a weaker U.S. currency makes gold less in other currencies.

Technical analysis

Gold prices rebounded for a second consecutive trading session but still remain in a bear flag pattern. This pattern is a continuation event that pauses before it refreshes lower. Resistance is seen near the 50-day moving average at 1,752. Support is seen near the 10-year moving average at 1,752. 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 is turning neutral as the MACD histogram is printing in negative territory with a rising trajectory which points to consolidation.

Manufacturing Rises More than Expected

The Institute for Supply Management’s U.S. manufacturing index rose to 61.1% in September from 59.9% in the prior month. The reading was the highest since May. Expectations had been for the index to come in at a reading of 59.5%. The ISM index had hit a high of 64.7% in March before rebounding over the last two months from a 59.5 reading in July.