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Gold Price Prediction – Prices Rise Led by Declining U.S. Yields

By:
David Becker

The dollar eased

Gold Price Prediction – Prices Rise Led by Declining U.S. Yields

Gold prices rebounded from session lows bouncing at support levels and closing in the black. The dollar moved lower and continued to experience headwinds as  U.S. yields broke down. The 10-year Treasury yield closed at the lowest level in 4-months declining down to 1.46%, after hitting a high of 1.67% early in May.  CPI came in stronger than expected, but much of the gains were due to the base-effect implemented in the May report. Recall, May 2020 saw a massive decline in GDP, employment and inflation.

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Technical analysis

Gold prices rebounded from session lows and continue to accelerate higher close in h black. Support is seen near an upward sloping trend line that comes in near 1,872.  Short-term resistance is seen near the 10-day moving average at 1,896 .Target resistance is seen near the May highs at 1,916. Short-term momentum continues to whipsaw after turning positive as the fast stochastic generated a crossover buy signal. 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 flat trajectory which points to consolidation.

Consumer Prices Surge

Consumer prices for May accelerated at their fastest pace since 2008 according to a report from the Labor Department. The consumer price index, rose 5% from a year earlier. Expectations were for a gain of 4.7%. The reading represented the biggest CPI gain since the 5.3% increase in August 2008, just before the financial crisis. The gasoline index is up 56.2% over the past year, part of an overall 28.5% increase in energy during the period. Food prices have remained comparatively tame, up 2.2% for the year.

 

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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