Gold Price Prediction – Prices Edge Higher Testing Resistance

Gold prices edged higher, hitting resistance the dollar whipsawed. U.S. yields were lower following a softer than expected wholesale inventory report. Jobless claims declined more than expected but failed to buoy yields and the greenback, which provided the impetus for higher gold prices.

Technical analysis

Gold prices moved higher testing target resistance which is a downward sloping trend line that comes in near 1,800. A close above this level would lead to a test of the September highs at 1,830. Short-term momentum is positive as the fast stochastic recently generated a crossover buy signal. Prices are overbought as the fast stochastic is printing a reading of 95, above the overbought trigger level of 80. 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.

Jobless Claims Fall More than Expected

According to the U.S. Labor Department, jobless claims fell below 300,000 for the first time since the early days of the Covid-19 pandemic. First-time claims for unemployment insurance totaled 293,000, the best level since March 14, 2020, which saw 256,000 claims just as the Covid-19 spread intensified. Expectations were for claims to fall to 318,000. Last week’s total represented a decline of 36,000 from the previous week. The four-week moving average dropped to 334,250, a 10,500 decline that also marked the lowest number since March 14, 2020.