Gold Price Prediction – Prices Consolidate but Momentum Remains Positive

Gold prices moved sideways on Monday as riskier assets surged. The sideways movement in the yellow metal came despite a drop in the U.S. dollar. U.S. Yields also moved lower on Monday, despite a stronger than expected increase in economic services growth. The ISM reported a better than expected index along with rising prices.

Technical Analysis

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Technical analysis

Gold prices traded sideways after rebounded sharply last week. Prices remained above support near the 10-day moving average at 1,721. Additional support is seen near the June lows at 1,670. Resistance is seen near the 50-day moving average at 1,767. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. 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 MACD histogram is printing in positive territory with an upward sloping trajectory which points to higher prices.

The ISM Services Rose More than Expected

The ISM’s services activity index, which makes up the bulk of the U.S. economy, rebounded to a reading of 63.7 in March due to warmer weather. That was the highest in the survey’s history and followed 55.3 in February. Expectations had been for the index to rise to 59.0 in March. The survey’s measure of prices paid by services industries jumped to the highest reading since July 2008. The surge in these price measures have added to concerns of higher inflation this year.