Gold Price Prediction – Prices Rally on Fed New Facility

Yields moved lower helping to buoy the yellow metal after the Labor Department reported a larger than expected increase in US jobless claims. This is the 3-straight multi-million person increase in initial jobless claims pushing continuing claims to an all-time high. Gold volatility, reflected by the VIX of gold, moved lower, declining to 27% after hitting a high of 55% in mid-March

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Technical Analysis

Gold prices surged higher after a couple of days of consolidation. Prices rallied up to 1,690 and are poised to test target resistance near the March highs at 1,703. A break of this level would lead to a test of 2012 highs at 1,795. Support is seen near the 10-day moving average at 1,628. Additional support is seen near the 50-day moving average at 1,600.

A short-term trend is upward sloping as the 10-day moving average has crossed above the 50-day moving average. Short term momentum is positive to neutral. The fast stochastic trajectory is sliding which reflects consolidation. The current reading of the fast stochastic is 90, above the overbought trigger level of 80 which could foreshadow a correction. Medium-term momentum has also turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. The MACD histogram also generated a crossover buy signal, and now the trajectory is moving higher which reflects accelerating positive momentum.

US initial jobless claims continued to swell due to the coronavirus shutdown, with 6.6 million Americans filing first-time unemployment claims last week according to the Labor Department. That brings the total claims over the past three weeks to more than 16 million. The most recent jobless number represents a decline of 261,000 from the previous week, which was revised up by 219,000 to nearly 6.9 million.