Gold Price Prediction – Prices Test Resistance as US Yields Drop

Gold prices again attempted to move higher but ran into strong resistance.  The dollar moved lower helping to buoy the yellow metal. US yields moved down following a soft CPI report. Federal Reserve Chairman Jerome Powell spoke to the NY economics club and described a bleak U.S. employment picture. The Fed chair said that aggressive monetary policy support would be needed to fix the myriad issues.

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Technical analysis

Gold prices attempted to move higher but ran into resistance near the 50-day moving average at 1,857. Short-term support is seen near the 10-day moving average at 1,834. Additional support is an upward sloping trend line that comes in near 1,788. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Medium-term momentum has also 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).

US CPI Rise Slightly

US consumer prices rose moderately in January. The Labor Department reported that its consumer price index increased 0.3% last month after climbing 0.4% in December. Year over year in January the CPI rose 1.4% after a similar gain in December. Economists expected the CPI to rise by 0.3% and increasing 1.5% year-on-year.