Gold Price Prediction – Prices Rise Despite Dollar Gains

David Becker
Published: Jul 1, 2021, 17:44 GMT+00:00

ISM misses expectations

Gold Price Prediction – Prices Rise Despite Dollar Gains

Gold prices moved higher, bouncing from support but remain rangebound. Gold faces headwinds as the dollar continued to rally. Since gold is priced in U.S. dollars, a strong dollar generated resistance for gold since it becomes more expensive in other currencies. U.S. Yields moved lower, following a weaker than expected ISM manufacturing report.  A positive sign for the economy was the drop in unemployment claims.

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Technical analysis

Gold prices moved higher but remain range-bound due to a strong greenback. Support is seen near an upward sloping trend line near $1,762. A break of this level would lead to a test of target support near an upward sloping trend line that comes in near $1,733.  Resistance is seen near the 10-day moving average at 1,774.5.  The 10-day moving average has crossed below the 100-day moving average, meaning that a short-term downtrend is now in place. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Prices are oversold. The current reading on the fast stochastic is 19, below the oversold trigger level of 20 which could foreshadow a correction. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) as the MACD (moving average convergence divergence) index generated a crossover sell signal. The MACD histogram is printing in negative territory with a rising trajectory which points to consolidation.

ISM Misses Expectations

The Institute for Supply Management reported on Thursday that its index of national factory activity slipped to 60.6 last month, the lowest reading since January. Expectations were for the index to dip to 61.0 in June. A global shortage of semiconductors is undercutting the production of motor vehicles, electronics and household appliances. The ISM survey’s measure of prices paid by manufacturers jumped to a record 92.1 last month from a reading of 88.0 in May.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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