Gold Price Prediction – Prices Ease as Dollar Stabilizes

David Becker
Comex Gold
Comex Gold

Gold prices edged lower on Tuesday as the dollar held steady. Traders took profits following 5-consecutive trading session for the yellow metal.  Yields continued to trade under pressure, which could help gold remain elevated. A softer than expected US Housing Starts figure along with weak building permits kept downward pressure on US yields.

Technical analysis

Gold prices edged lower but held short-term support near the 20-day moving average at 1,221. A break through this level would lead to a test of the 50-day moving average at 1,212. Short term momentum remains positive as the fast stochastic has an upward sloping trajectory after recently generating a crossover buy signal. Additionally, the MACD (moving average convergence divergence) index is poised to generate a crossover buy signal. This 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 relative strength index (RSI) is printing a reading of 52, which is in the middle of the neutral range and reflects consolidation.

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US Housing Starts and Building Permits Where Weaker than Expected

US Housing starts rose by 1.5% in October which was softer than the 2.5% to an annual rate of 1.228 million units last month. Data for September was revised to show starts dropping to a rate of 1.210 million units instead of the previously reported pace. The rebound reflects strong growth in multi-family projects but construction of single-family homes fell for a second straight month. Building permits slipped 0.6% to a rate of 1.263 million units in October.

The housing market is being but rising mortgage rates which could decline in late November as the 10-year yield slips. Labor shortages have led to tight inventories and higher house prices. This is making home buying unaffordable for many workers as wage growth has lagged. So while sales have declined prices have yet to slip, as tight supplies are offsetting slipping demand.

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