Gold Price Prediction – Prices Fall as the Dollar Gains Traction

Gold prices dropped on Monday as the House of Representatives passed a COVID relief bill. The dollar rose, notching up strong gains and weighing on the yellow metal. The U.S. Treasury yields continued to rise following a larger than expected employment report released on Friday. Goldman Sachs announced that it believes that the unemployment rate will fall to 4%, which further buoyed yields.

Trade gold with FXTM

Technical analysis

Gold prices moved lower on Monday and are poised to test target support seen near the June lows at 1,670.   Resistance is seen near the 10-day moving average at 1,737. Prices are oversold as the relative strength index (RSI) is printing a reading of 26, below the oversold trigger level of 30. The fast stochastic is printing a reading of 7, below the oversold trigger level of 20 which could foreshadow a correction.  Medium-term momentum has negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. The MACD histogram is printing in negative territory with a downward sloping trajectory which points to lower prices.

The House Passes Relief Bill

The House of Representatives plans to pass Democrats’ $1.9 trillion coronavirus relief bill Tuesday and get fresh aid to Americans starting this month. Separately, Goldman Sachs projects an unemployment rate of 4.1% that could be even lower depending on just how powerful the recovery gets amid more fiscal stimulus and a return to work for sectors hit hardest by the coronavirus.