Gold Price Prediction – Prices Slip as Dollar Index Surges

Gold prices continued to trade under pressure on Thursday as the dollar index surged higher. Most of the dollar’s gains came against the Euro which hit a 35-month low of 1.0655. Since gold prices are quoted in US dollars the strong gain in the greenback weighed on the yellow metal. US yields moved lower across the curve following a much weaker than expected US jobless claims report that showed claims rising by more than 60K in the past week. According to the New York, Labor Department calls for unemployment claims surged in the latest week which has yet to be reported.

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Gold prices declined on Thursday and are poised to push through support as prices made a lower low and a lower high. Prices closed below the 200-day for the second consecutive trading session and are poised to test the weekly lows at 1,451.  Resistance is now seen near the 10-day moving average at 1,575.

Short term momentum has whipsawed and turned negative after turning positive during the prior session. The current reading on the fast stochastic is 18 below the oversold trigger level of 20 which could foreshadow a correction.

Medium-term momentum is negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram sliced through the zero-index line which reflects accelerating negative momentum. The MACD accelerated to the lowest level seen since September of 2011.