Gold Price Prediction – Prices Contract as U.S. Yields Surge as Protestors Storm the Capital

Gold prices reversed course on Wednesday, moving lower and testing support, but bouncing late in the session. The dollar continued to trend lower, hitting a fresh 33-month low while U.S. yields surged higher. Weaker than expected ADP private payrolls failed to weigh on U.S. yields. During the procedural motions of the confirmation of the senate’s electoral college, Trump supporters stormed the capital, breaching the senate chamber.

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Technical analysis

Gold prices moved lower, breaking down and testing trend line support. November highs near 1,950. Support is near the 10-day moving average near 1,897. Resistance is seen near the January highs at 1,959.  The 10-day moving average crossed above the 50-day moving average, which means a medium-term uptrend is now in place.  Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 88, above the overbought trigger level of 80, foreshadowing a correction. Medium-term momentum is positive as the MACD (moving average convergence divergence) histogram prints in the black with a positive trajectory, which points to higher prices.

ADP Private Payrolls Unexpectedly Decline

U.S. Private payrolls in December contracted for the first time since March, according to ADP. The decrease of 123,000 provided a sign that the U.S. economy had cooled considerably heading into the end of 2020. Expectations had been for growth of 60,000. Companies laid off a net 19.4 million workers in April and have recovered 9.9 million since, according to ADP.