Gold Price Prediction – Prices Consolidate as the Dollar Rises

Gold prices formed a doji day as indecision perpetuated. The dollar moved higher, capping any upside movement in the greenback. U.S. yields declined on the long end of the curve but were relatively stable in the 2-year sector. The Labor Department reported a pandemic level low for U.S. jobless claims, which should have helped buoy bond yields. Additionally, New York Manufacturing rose to a record high.

Technical analysis

Gold prices were unchanged after rising during the week but fell short of resistance near the 50-day moving average at 1,837. Support is seen near the 10-day moving average at 1,805.  Short-term momentum has flip-flopped, turning negative as the fast stochastic generated a crossover sell signal. Prices are overbought as the fast stochastic is printing a reading of 91, above the overbought trigger level of 80, which could foreshadow a correction. Medium-term momentum has shifted positively 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). The MACD histogram is printing in positive territory with an upward sloping trajectory which points to higher prices.

Jobless Claims Rise

According to the Labor Department U.S. Jobless claims for unemployment insurance fell to a new pandemic-era low last week. Initial claims increased by 360,000, in line with estimates and the best number since March 14, 2020. Continuing claims, which includes claims for more than 2-weeks, dropped  by 126,000 to 3.24 million. This is still well above pre-pandemic levels.