Gold Price Prediction – Gold Breaks Out to Fresh 7-Year Highs

Gold prices hit fresh 7-year highs rising above 1,623 and settling near 1,619. This comes despite a surge in the US dollar which nearly hit 100 on the dollar index for the first time since 2012.  Historically, as the dollar increases in value, gold prices moderate. This is because the gold benchmarks are priced in dollar, and as the dollar rises, gold prices generally moderate to incorporate the higher cost for gold using currencies other than the greenback. Initial jobless claims increased slightly but still remain near multi-year lows.

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Technical analysis

Gold prices rally of the 5^th time in 6-trading session. Prices have broken through the January highs at 1,611 and are targeting the January 2013 highs at 1,673. Support on the yellow metal is seen near the 10-day moving average at 1,585. Medium-term momentum has 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 MACD histogram has moved above the zero-index level which is also a buy signal. The MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices.

The relative strength index (RSI) is moving higher pushing above the overbought trigger level of 70 which reflects accelerating positive momentum but also could signify a potential correction. The continued acceleration of the RSI is important as prices are breaking out.

Jobless Claims Bounce

Initial claims increased 4,000 to 210,000 for the week ended February 15, according to the Labor Department. The expectation had forecast claims to increase to 210,000 in the latest week. The four-week moving average of initial claims, fell 3,250 to 209,000 last week.