Gold Price Prediction – Prices Edge Higher Despite Rising 2-Year Yields

Gold prices edged higher on Wednesday, bouncing near trend line support which was former resistance. The dollar eased slightly, which provided tailwinds for the yellow metal. Yields were and the yield curve flattened as the 2-year yield hit the highest level at 49-basis points since March 2020 at the beginning of the pandemic.

Technical analysis

Gold prices bounced higher and held above trend line resistance which is now support at 1,790. Additional support is seen near the 10-day moving average at 1,785. Resistance is seen near the September highs at 1,830. The 10-day moving average crosses above the 50-day moving average, which means a short-term uptrend will be in place. Short-term momentum turned negative as the fast stochastic generated a crossover sell signal. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated 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 MACD histogram is printing in positive territory with an upward sloping trajectory which points to higher prices.

Mortgage Rates Rise to an 8-Year High

Mortgage rates rose to an 8-year high, driven by higher Treasury yields. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 3.30% from 3.23%, with points decreasing to 0.34 from 0.35 for loans with a 20% down payment. That rate was 30 basis points lower one year ago.