Gold Price Prediction – Prices Trade Sideways as the Dollar Rallies

Gold prices consolidated for the second consecutive trading session following a surge that saw a two day gain of $83 per ounce. The dollar moved higher generating a minor headwind for prices. US yields moved lower, following the negative data released by the US Labor Department. The markets expected bad news, but the shocking reality of how bad it really is has helped buoy gold prices. Gold volatility, reflected by the VIX of gold, moved lower initially during the trading session but rebounded into the close. Volatility hit a low just below 24% and ending the session just shy of 28%.

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Technical Analysis

Gold prices consolidated for a second consecutive session after hitting a 7-year high and is still poised to test target resistance near the August 2012 highs near 1,791. Support on the yellow metal is seen near the March highs at 1,703. Additional support is seen near the 10-day moving average at 1,674. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. This happened as the fast stochastic is printing a reading of 84, above the overbought trigger level of 80, which could foreshadow a correction. Medium-term momentum remains positive and has started to consolidate as the MACD (moving average convergence divergence) histogram is still printing in the black with a declining trajectory which points to consolidation.

Jobless Claims Rise

US Initial jobless claims increased by 5.245 million  according to the US Labor Department. The rise increases the total to just over 22 million, wiping out most of the job gains since the Great Recession. The total was a bit worse than the 5 million expected. Last week’s initially reported total of 6.606 million was revised up slightly to 6.615 million. The four-week moving average, jumped to 6.066 million, an increase of 2.568 million the previous week. The total claims of 22.03 million filed since social distancing measures took effect reflects a 13.5% drop in household employment.