Gold Price Prediction – Prices Rise as The Dollar Stabilizes and Mortgage Rates Decline

Gold prices continue to rally on Wednesday, trending higher and poised to test target resistance.  Gold prices moved higher as the dollar consolidated and moved lower and U.S. yields stabilized. The dollar’s decline has helped buoy commodity prices, which are rising in base metals, and agriculture as well. Mortgage demand surged higher as rates at the long-end of the interest rates curve declined.

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Technical analysis

Gold prices moved higher on Wednesday prices head for resistance near a Fibonacci retracement level of 38.2%, which is seen near 1,828. T. Target resistance on the yellow metal is seen near the February highs at 1,855. Support is seen near the 10-day moving average at 1,759. The 10-day moving average has crossed above the 50-day moving average which means that a short-term up trend is now in place. Short-term momentum reversed and turned negative as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 89, above the overbought trigger level of 80. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. The MACD histogram is printing in positive territory with a declining trajectory which points to consolidation.

Mortgage Demand Surges

Mortgage demand surged as a sharp drop in mortgage interest rates sent homeowners and potential homebuyers to their mortgage lenders. According to the Mortgage Bankers Association’s seasonally adjusted index, total mortgage application volume surged 8.6% week over week. That is the first overall increase in weekly applications since the end of February. The average contract interest rate for 30-year fixed-rate mortgages decreased to 3.20% from 3.27%. Applications to refinance a home loan jumped 10% week over week but were still 23% lower than a year ago.