Gold Price Prediction – Prices Break Out Above 200-day Moving Average and are Poised to Move Higher

Gold prices broke out on Monday and continued to rally as the dollar eased and U.S. yields stabilized. The Fed remains on hold, which has kept U.S. yields steady, capping any upward movement in the U.s. dollar. Builder sentiment in the single-family housing market was unchanged at 83 in May, in line with expectations.

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Technical analysis

Gold prices broke out on Monday, closing above the 200-day moving average for the first time since February. Target resistance is seen near the Fibonacci retracement level of 61.80%, which is seen near 1,902. The 10-day moving average has crossed above the 50-day moving average, meaning that a short-term uptrend is now in place. The 10-day moving average is fast approaching the 200-day moving average. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. The current reading on the fast stochastic is 91, above the overbought trigger level of 80, foreshadowing a correction. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) histogram prints in the black with a flat trajectory which points to consolidation.

Builder Sentiment Moves Sideways

Builder sentiment in the single-family housing market was unchanged at 83 in May, according to the NAHB/Wells Fargo Housing Market Index. The index had plummeted to 37 last May, as the pandemic lockdown hit and the housing market shut down. Builders now say they continue to see a steady stream of buyers due largely to the extreme shortage of existing homes for sale.