Gold Price Prediction – Prices Rally as Momentum Turns Positive

Gold prices rallied and continued to trend higher after breaking out on Friday.  U.S. yields bounced back following Friday’s stronger than expected U.S. Jobs report. The greenback continued to chop sideways but declined on Monday, helping to buoy gold prices. Over the weekend, the House of Representatives passed a 1-trillion dollar infrastructure bill, which should provide additional stimulus to the U.S. Economy.

Technical analysis

Gold prices rose and continue to trend higher after breaking out on Friday. Support is seen near the breakout level which is the September highs at 1813.Target resistance is seen near the June highs at 1916 Short-term momentum is positive as the fast stochastic generates a crossover buy signal. Prices are overbought as the fast stochastic is printing a reading of 99, well above the overbought trigger level of 80. Medium-term momentum has also turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD line). The MACD histogram is printing in positive territory with an upward sloping trajectory which points to higher prices.

The House Passes a Stimulus Bill

Over the weekend, the House of Representatives passed its infrastructure bill. This vote followed the drubbing the Democrats took in the local election on Tuesday last week. The bill was a 1-trillion dollar infrastructure bill that excluded some social policies, which is why the bill was held up after passing the Senate months ago.