Gold Price Prediction – Prices Consolidate Ahead of Inflation Gauge

Gold prices attempted to move higher but were unable to gain any traction. The dollar edged higher despite a rebound in riskier assets like stocks. The gold ETF moved in conjunction with bullion prices.  Yields moved higher, but there was no impetus following Friday’s mixed unemployment report. The markets continue to price in a Fed rate hike in 2022, and inflation is the key to the Fed’s activity.

Technical Analysis

Gold prices edged lower and was unable to purchase above resistance is seen near the 10-day moving average at 1,783. Support on the yellow metal is seen near the September lows at 1,721. The 10-day moving average has crossed below the 50-day moving average, which means a short-term downtrend is in place. Medium-term momentum has turned negative as the MACD (moving average convergence divergence index) generated a crossover sell signal. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Prices are oversold as the fast stochastic is printing a reading of 17, below the oversold trigger level of 20.

Gold is a Store of Value

Gold prices have remained steady as the markets reprice value. Riskier assets such as stocks have come under pressure and increased volatility. The VIX volatility index ETF surged to a 12-month high but slightly off on Monday. Gold has not gain traction based on a safe haven trade, and traders await a selloff in the dollar before it can begin a new uptrend. The big unknown is how Fed Chair Jerome Powell will act toward inflation.