Gold Price Prediction – Prices Eases on Robust New Home Sales Report

Gold prices edged lower and continued to consolidate.  The sideways movement in the greenback has stalled the upward momentum of gold prices. US yields also moved higher on Tuesday generating headwinds for gold prices. This followed a stronger than expected new home sales report which comes on the heels of last week’s better than expected existing home sales report. Gold implied volatility eased on Tuesday down  to 23% after hitting a high of 28.5% last week. Gold implied volatility is the variable that is used to price gold options. While 23% is a 3-week low it is well above the average seen in 2019 which was closer to 15%.

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Technical analysis

Gold prices edged lower and continued to consolidate. Prices were unable to recapture resistance near the 10-day moving average at 1,946. Target support is seen near the 50-day moving average at 1,871. Medium-term momentum remains negative as the MACD histogram is printing in the red with a sliding trajectory which points to lower prices. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal, and continues to accelerate lower. The relative strength index also broke down which reflects accelerating negative momentum.

New Home Sales Surge

New home sales surged to highest level since 2006 according to the US Commerce Department. Sales of new single-family houses rose 14% between June and July to an annual rate of 901,000. Con a year over year basis new home sales were up 36%. Expectations were for new home sales to rise to a rate of 790,000. The government also revised June’s new home sales figure to a rate of 791,000, up from 776,000.