Gold Price Prediction – Prices Rise as the Dollar Drops

Gold prices moved higher, but the upward momentum eased slightly. Prices remain above key support after gold sliced through the 200-day moving average. The dollar continued to tumble, and U.S. yields edged lower. Weaker than expected U.S. Housing starts weighed on yields and put downward pressure on the dollar.

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Technical analysis

Gold prices moved higher but the momentum started to decelerate following Monday’s robust break out which put prices above the 200-day moving average for the first time since February. Target resistance is seen near the Fibonacci retracement level of 61.80%, which is seen near 1,902. Support is seen near the 200-day moving average at 1,847. The 10-day moving average has crossed above the 50-day moving average, meaning that a short-term uptrend is now in place. The 10-day moving average is fast approaching the 200-day moving average. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. The current reading on the fast stochastic is 97, above the overbought trigger level of 80, foreshadowing a correction. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) histogram prints in the black with a with an upward sloping trajectory which points to higher prices.

U.S. Housing Starts Decline

U.S. housing starts fell more than expected in April, likely pulled down by soaring prices for building materials. Housing starts tumbled 9.5% to a seasonally adjusted to an annual rate of 1.569 million units last month. Data for March was revised lower to a rate of 1.733 million units, still the highest level since June 2006, from the previously reported 1.739 million units. Expectations were for starts to fall a 1.71 rate. Starts surged 67.3% on a year-on-year basis in April.