Gold Price Prediction – Prices Trend Highs as the Dollar Dips

Gold prices continued to trend upward as U.S. yields declined, putting downward pressure on the greenback. Since gold is priced in U.S. dollars, a weaker greenback tends to lift the value of the yellow metal. The Federal Reserve April meeting minutes reported that a strong pickup in economic activity would warrant discussions about tightening monetary policy.

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Technical analysis

Gold prices moved higher and the trend is pointing to higher prices as the 10-day moving average crossed above the 200-day moving average. Target resistance is seen near the Fibonacci retracement level of 61.80%, which is seen near 1,902. Support is seen near the 200-day moving average at 1,846. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Prices are also overbought as the RIS is printing a reading of 72, above the overbought trigger level of 70 which could foreshadow a correction. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory which points to higher prices.

The Fed Could Alter Bond Purchases if Growth Accelerates

The Federal Reserve April meeting minutes reported that a strong pickup in economic activity would warrant discussions about tightening monetary policy. Participants suggested that if the economy continued to make rapid progress, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases. Markets have been watching closely for clues about when the central bank might start tapering its bond purchases, which currently are at least $120 billion a month.