Gold Price Prediction – Prices Slip as the Dollar Rallies

Gold prices moved lower, and continue to trade sideways. The strong upward surge in the dollar generated headwinds for the yellow metal. The US yields at the long end of the curve, rallied, closing near 70-basis points which is the highest in the past money. The 2-year yield also rebounded, closing near 18-basis points up 6-basis points since early Friday. Hedge funds reduced long positions in futures and options and increase short positions according to the latest CFTC report.

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Technical Analysis

Gold prices slipped for a second consecutive trading session and remain rangebound. Prices slipped back through support which is seen as current resistance near the 10-day moving average 1,701. Target resistance is seen near the April highs at 1,747. Additional support is seen near an upward sloping trend line that comes in near 1,674. Short term momentum on gold prices has turned positive as fast stochastic generated a crossover buy signal in the middle of the neutral range. The trajectory of the fast stochastic is sideways which reflects consolidation. Medium-term momentum is negative as the MACD (moving average convergence divergence) histogram is printing in the red with a downward sloping trajectory which points to lower prices.

Hedge Funds Reduce Long Positions

Managed money reduced short position in futures and options according to the latest commitment of traders reports released for the date ending May 5, 2020. According to the CFTC, managed money reduced their short positions in futures and options by approximately 10K contracts while increasing short positions by 1.8K contracts. The open interest still remains heavily skewed to long positions. A selloff would likely generate a rush toward the doors.