Gold Price Prediction – Prices Rise as the Dollar Continues to Drop

Gold prices rebounded for the third consecutive trading session as the dollar continued to experience downward pressure. Since gold is priced in US dollars, a declining greenback is positive for gold prices. The dollar index closed at a 31-month level not seen since April of 2018. US yields moved lower, following a softer than expected ISM service report. US jobless claims declined more than expected ahead of Friday’s payroll report.

Trade gold with FXTM

Technical analysis

Gold prices rebounded and continued to trend higher and are poised to test the November highs near 1,900. Support is seen near the 10-day moving average at 1,818 and then the 200-day moving average at 1,802.  The weekly Fibonacci retracement of the rally from August 2019 to July 2020 comes in near 1,737. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. The current reading on the fast stochastic is 47, up from 31, which reflects accelerating positive momentum. Medium-term momentum is poised to turn positive as the MACD (moving average convergence divergence) index is poised to generate a crossover buy signal.

ISM Non-Manufacturing Slides More than Expected

The service sector in the US slowed to a 6-month low in November according to a report on Thursday from the Institute of Supply Management. The ISM service index, also known as the non-Manufacturing Index, fell to a reading 55.9 in November. That was the lowest reading since May when the recovery started and followed 56.6 in October. The second straight monthly decrease pulled the index further below its 57.3 level in February. Expectations had been for the index to fall to 56.0 in November.