Gold Price Prediction – Prices Consolidate in Middle of Range Despite Decline in Claims

Gold prices moved sideways as the dollar consolidated as the dollar moved lower and U.S. yields remained stable. Gold volatility was unchanged, hovering near the 23% range. The increase in yields followed better than expected jobless claims along with strong housing starts.

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Technical analysis

Gold prices consolidated on Thursday and is trading just above support near the 50-day moving average at 1,859. Resistance is seen near an upward sloping trend line that comes in near 1,939. While the trend is more of sideways price action, the 10-day moving average crossed below the 50-day moving average, which means a short-term downtrend is in place. Short-term momentum has reversed and turned positive as the fast stochastic generated a crossover buy signal. The current reading on the fast stochastic is 36, up from 21 and above the oversold trigger level. Medium-term negative momentum has decelerated as the MACD (moving average convergence divergence) histogram is printing in the red with a rising trajectory, which points to consolidation.

Jobless Claims Declined More than Expected

The Labor Department reported that jobless claims totaled 900,000 for the week ended January 16. That was slightly less than expectations of 925,000 and below the previous week’s downwardly revised total of 926,000. Continuing claims showed a slight decrease for the week, falling by 127,000 to 5.05 million.