Gold Price Prediction – Prices Consolidate Despite Diving U.S. Yields

Gold prices moved sideways on Monday as the dollar edged higher and yields moved lower. The stronger than expected Dallas Fed Survey failed to buoy yields. This move comes ahead of a deluge of data later in the week as the U.S. releases ISM Manufacturing and the Non-Farm Payroll report.

Technical analysis

Gold prices continued to form a bear flag continuation pattern. Prices remain above support near the and upward sloping trend line that comes in near $1,762. A break of this level would lead to a test of target support near an upward sloping trend line that comes in near $1,731.  Resistance is seen near the 100-day moving average at 1,793.  The 10-day moving average has crossed below the 100-day moving average, meaning that a short-term downtrend is now in place. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Prices are oversold. The current reading on the fast stochastic is 12, below the oversold trigger level of 20 which could foreshadow a correction. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) as the MACD (moving average convergence divergence) index generated a crossover sell signal. The MACD histogram is printing in negative territory with a rising trajectory which points to consolidation.

Dallas Fed Survey Surges

The production index of Dallas Fed Index increased to 29.4 in June from 15.7 in May. The index for general business activity, which assesses broader business conditions, fell to 31.1 in June from 34.9 in May. The new orders index increased to 26.7 in June from 20.8 in May, while the growth rate of orders index climbed to 23.4 from 19.5 the previous month. The capacity utilization index rose seven points to 30.6, and the shipments index increased 14 points to 31.8.