Gold Price Prediction – Prices Break out and Close at 7.5-Year Highs

Gold prices broke out on Thursday closing at a fresh 7.5-year high close. This comes despite a higher dollar index, and lower US yields. The 2-year yield dipped lower to 15-basis points, slightly above the low for the move near 12-basis points. Gold prices also broke out versus the Euro hitting a fresh 9-year high. Gold implied volatility, which is a measure of how far option traders believe gold prices will move over the next year, increased to 24.5%, coming off a high in March of 54%. This compares to the 200-day moving average of 18%, and the average during 2019 of 12%. A reading of 24.5% means that options traders believe that prices will have a daily range of at least 1.5%. The moved in gold prices comes after another huge increase in first time jobless claims.

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Technical Analysis

Gold prices broke out above trend line resistance and closed the session at a fresh 7.5 year high. The next level of target resistance is the April intra-day highs at $1,747. A close above this level would target the October 2012 highs at $1,795. Support on the yellow metal is seen near the breakout level at $1,716 and then the 20-day moving average at $1,706.

Short-term momentum on gold prices has turned positive as the fast stochastic generated a crossover buy signal. The signal was in the middle of the neutral range and reflects accelerating positive momentum. Medium-term momentum is turning positive as the MACD (moving average convergence divergence) index is poised to generate a crossover buy signal.  The MACD histogram is fast approaching the zero-index level which would also be a crossover buy signal. The MACD histogram has an upward sloping trajectory which points to higher prices.

Jobless Claims Continue to Surge

US initial jobless claims rose just shy of 3 million according to the Labor Department. Claims totaled 2.981 million pushing the total since the shelter in place orders to nearly 36.5 million, by far the biggest loss in U.S. history. Expectations were for a 2.7 million rise in new claims.