Gold Price Prediction – Prices Surge as the Dollar Drops as the Yellow Metal Breaks Out

Gold prices surged higher, rising 2.3%, as the dollar declined and yields consolidated. Gold had been viewed as a riskier asset and after a 3-day rally in stocks, gold prices finally moved higher. The dollar moved lower as yields remained subdued after the 10-year dropped from 92-basis points on Tuesday to 75-basis points on Thursday. The Fed kept rates unchanged while the BoE increased its bond purchase program by more than expected.

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Technical analysis

Gold prices surged higher rising 2.3% on Thursday and broke out of a tight range. Support on the yellow metal is seen near the 50-day moving average at 1,914, and then the 10-day moving average at 1,896. The 10-day moving average is poised to cross above the 50-day moving average which would mean a short-term uptrend was in place. Short-term momentum is positive as the fast stochastic continued to accelerate higher. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices.

The Fed Keeps Rates Unchanged

The Federal Reserve kept rates unchanged as widely expected. The Fed said that economic output and employment have improved but remain well below pre-pandemic levels. It appears that the language describes a slight decline in economic activity. The Fed’s decision to hold steady comes amid concerns over the direction of the economy as Covid-19 cases accelerate. The Fed also said that their target inflation rate remains at 2%. The Fed’s decision was unanimous at this meeting.