Gold Price Prediction – Prices Slip as Yields Rise

Gold prices moved lower on Monday, declining for a second consecutive trading session after testing resistance and rising 1.3% last week. The dollar was nearly unchanged, but U.S. Treasury yields moved higher, which put downward pressure on gold prices. This came following a 60-minute interview that aired on Sunday with Fed Chair Jerome Powell. Despite a growing economy the Fed Chair reaffirmed the central bank’s commitment to keeping loose monetary policy in place for the entire year.

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Technical analysis

Gold prices moved lower after failing to recapture resistance seen near the 50-day moving average at 1,759. Support is seen near the 10-day moving average at 1,727. Additional support is seen near the June lows at 1,670. Short-term momentum is negative as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 81, above the overbought trigger level which foreshadows a correction. 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 declining trajectory which points to consolidation.

Fed Will Remain Unchanged in 2021

Federal Reserve Chairman Jerome Powell has reaffirmed the central bank’s commitment to keep loose monetary policy in place. His view includes near-zero short-term borrowing rates and $120 billion a month in bond purchases put in place following a sharp rebound from the plunge in activity between February and April 2020. Though the economy has recovered more than 13 million jobs since the depths of the crisis, there remain about 9 million more still sidelined.