Gold Price Prediction – Prices Surge as the Dollar Eases

Gold prices surged higher on Monday rising more than 3.25%. This comes despite little movement in the dollar index which consolidated despite a rally in the Euro. The USD/JPY gained ground keeping the dollar index stable. US yields moved lower across the curve following news that the senate was unable to pass a procedural vote to get a bill across that would help Americans. There are economists that now thing the US economy could see unemployment rise to 20% in the next few months, as jobless claims begin to accelerate sharply.

 

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Technical Analysis

Gold prices surged higher, rising more than 3%, pushing through resistance which is now support, near the 200-day moving average at 1,502. Current resistance is seen near the 10-day moving average at 1,544.

Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. This occurred in oversold territory and the fast stochastic has climbed to 22, which is above the oversold trigger level of 20. The relative strength index has also moved higher, rising sharply which reflects accelerating positive momentum. The MACD (moving average convergence divergence) histogram is beginning to rise, heading for the zero index level which reflects accelerating positive momentum. The MACD line is printing in the red with a rising trajectory which points to consolidation.

Fed Moves Quickly While the Senate Procedural Bill Remain on Hold

The Federal Reserve was active today announcing that they would purchase treasury bonds and agency bonds at a rate that would buoy the overall economy. It’s an unlimited number of purchases. The Fed also announced that they were setting up a 300-billion lending facility which is expected to target loans for small businesses. Despite the Fed moving quickly, but fiscal policy remains stuck in the mud.