Gold Price Prediction – Prices Break Out to 7-Year Highs and are Targeting $1,790

Gold prices are continuing to break out and closed on Tuesday at a fresh-7-year high. The US dollar moved lower on Tuesday paving the way for higher gold prices. US yields edged lower following a softer than expected existing homes sales report. Concerns that COVID cases have reaccelerated in the US has helped lift the yellow metal.

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Technical analysis

Gold prices moved higher closing above trend line resistance and continue to break out closing at fresh 7-year high. Support on the yellow metal is seen near the 10-day moving average at 1,737. Target resistance on the yellow metal is the August 2012 highs at $1,791. Short term momentum has turned positive as the fast stochastic generated a crossover buy. The current reading on the fast stochastic is 95, above the overbought trigger level of 80 which could foreshadow a correction. Medium-term momentum has 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).

New Homes Sales Rose More than Expected

Sales of newly built homes rose more than expected, up nearly 13% annually, according to the U.S. Census. Single-family housing starts in May were close to 18% lower annually, and building permits, an indicator of future construction, were down about 10%. Homebuilders are ramping up hiring to meet the improved demand, adding 226,000 workers in May.