Gold Price Prediction – Prices Whipsaw on Profit Taking

Gold prices whipsawed on Wednesday, rebounding from session lows after rallying for 4-consecutive trading days. The dollar also whipsawed and attempted to rally but could not gain traction. The 10-year yield also rallied, as the yield curve finally steepened after multiple days of flattening. U.S. home prices surged in October, according to data from S&P Case Shiller.

Technical Analysis

Gold prices whipsawed as the 4-day rally came to a close. Support is seen near the 50-day moving average at $1,802. Resistance is seen near a downward sloping trend line at $1,857.  Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Prices are overbought as the fast stochastic prints a reading of 87, above the overbought trigger level of 80. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. The MACD histogram is printing in positive territory with an upward sloping trajectory which points to higher prices. The 10-day moving average is poised to cross above the 50-day moving average, which means a short-term uptrend could now be in place.

U.S. home prices surged in October as the housing market continued to boom. The S&P CoreLogic Case-Shiller 20-city home price index climbed 18.4% in October year over year. The gain marked a slight deceleration from a 19.1% year-over-year increase in September but was in line with expectations.