Gold Price Prediction – Prices Drop as the Dollar Soars
Gold prices dropped on Wednesday as the dollar surged to a six-month high. The upward momentum in yields in the U.S. continues to help buoy the greenback. Since gold is priced in U.S. dollars, a stronger U.S. currency makes gold more expensive in other currencies providing the impetus to push the yellow metal lower.
Gold prices dropped and is now playing out the bear flag pattern. This pattern is a continuation event that pauses before it refreshes lower. Prices are now poised to test target support is seen near the August lows at 1,677. Resistance is seen near the 10-day moving average at 1,751. The 10-day moving average has crossed below the 50-day moving average, which means that a short-term downtrend is now in place. Short-term momentum has reversed and turned negative as the fast stochastic generated a crossover sell signal.
Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover signal. This sell signal occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in negative territory with a downward sloping trajectory which points to lower prices.
Pending Home Sales Rise
According to the National Association of Realtors, pending home sales to purchase existing homes increased 8.1% month to month in August. Analysts were expecting a 1% monthly rise. Signings were still down 8.3% compared with August 2020. August’s increase followed two months of declines. These so-called pending home sales are a future indicator of signed contracts in one to two months.