Gold Price Prediction – Prices Continue to Rally Despite a Strong Greenback

Gold prices continued to rally on Thursday and tested trend line resistance.  The dollar also rallied sharply but U.S. yields were unchanged. The bond market and banks were closed in the U.S. in observance of the Veterans Day holiday. On Wednesday the Labor Department reported that consumer inflation hit a 30-year high. Jobless claims also hit a pre-pandemic low, which has helped to buoy the yellow metal.

Technical analysis

Gold prices broke out of a 5-month range testing trend line resistance near a downward sloping trend line that comes in near 1,886. Target resistance is seen near the June highs at 1916. The 10-day moving average has crossed above the 50-day moving average which means a short-term up trend is now in place. Short-term momentum has turned negative as prices are overbought. The fast stochastic generates a crossover sell signal. Prices are overbought as the fast stochastic is printing a reading of 93, well above the overbought trigger level of 80. Medium-term momentum has also turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD line). The MACD histogram is printing in positive territory with an upward sloping trajectory which points to higher prices.

Jobless Claims Fall

The unemployment benefits tally fell to a new pandemic low 267,000 last week as the job market recovers from last year’s sharp coronavirus downturn. Jobless claims fell by 4,000 last week, the Labor Department reported Wednesday. The four-week average of claims, dropped by nearly 7,300 to 278,000, also a pandemic low.