Gold Price Prediction – Prices Edge Higher on Softer Dollar

Gold prices continued to grind higher as the dollar fell for a third consecutive trading session. Treasury yields were mixed with the 2-year surging higher. Since gold is priced in U.S. dollars, a weaker U.S. currency makes gold less in other currencies. Inflation data released at the end of last week by the Commerce Department showed that the PCE was slightly stronger than expected.

Technical analysis

Gold prices rebounded for a third consecutive trading session but still remain in a bear flag pattern. This pattern is a continuation event that pauses before it refreshes lower. Resistance is seen near the 50-day moving average at 1,783. Support is seen near the 10-year moving average at 1,752. Short-term momentum has reversed and turned positive as the fast stochastic generated a crossover buy 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).

Inflation Continues to Rise

The Fed’s favored gauge of inflation increased in September and continued to show strength. The core personal consumption expenditures price index, excluding food and energy costs increased 0.3% for the month and was up 3.6% from a year ago. The monthly gain was slightly higher than the 0.2% expected and higher than the consensus annual forecast of 3.5%. That’s the highest since May 1991 and reflective of inflationary pressures that Fed Chairman Jerome Powel.