Gold Price Prediction – Prices Rise Despite Dollar Gains

Gold prices rallied for a third consecutive trading session and finished the week up 1.25%. U.S. Yields were lower, with the 10-year outperforming the 2-year, allowing the curve to flatten to the lowest levels in December and nearly 1-year lows. Manufacturing surveys continue to point to strength in the U.S. economy, but the fear of the spread of the omicron variant is generating additional volatility in riskier assets.

Technical Analysis

Gold prices rallied and held former resistance now support near the 50-day moving average at 1,798. Support is seen near the 10-day moving average at $1,784.  Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Prices are overbought as the fast stochastic prints a reading of 86, 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 an upward sloping trajectory which points to higher prices.

Factory Output Rises

According to the Federal Reserve, the manufacturing output index climbed 0.7% last month to 100.6, the highest level since January 2019. That followed a 1.4% rebound in October. Expectations were for factory production to rise 0.7%. Output increased 4.6% compared to November 2020. Manufacturing accounts for 12% of the U.S. economy.