Gold Price Prediction – Prices Slip on Dollar Strength

Key Insights

• Gold prices traded lower, and the Fed Quiet Period started. 
• The dollar moved higher.
• Treasury yields rose across the curve. 

Gold prices eased on Monday as the dollar rose. Since gold is quoted in U.S. dollars, a strong greenback will weigh gold prices.

The dollar moved higher as yields increased, pushing the interest rate differential in favor of the greenback.

Benchmark yields rose following the stronger than expected jobs report. The ten-year yield is higher, pushing back through the 3.0% market up to the 3.03% level.

The quiet period for Fed members has started ahead of their June 14/15 monetary policy meeting. Last week yields continued to rise in the wake of a strong jobs report. The end of year Fed Funds futures contract is now pricing in rates of 2.70%, which implies another 100-basis points of tightening over the next 2-meetings.

Technical Analysis

Gold prices eased. Prices tested support near the 10-day moving average at 1,852.

Resistance is seen near the 200-day moving average of 1841.

Short-term momentum turns negative as the Fast Stochastic generates a crossover sell signal.

Medium-term momentum turns positive as the MACD generates a crossover buy signal. This occurs as the 12-day moving average minus the 26-day moving average crosses below the 9-day moving average of the MACD line.

The  MACD (moving average convergence divergence) histogram has a positive trajectory pointing to higher prices.