Gold Price Prediction – Gold Surges as Yields Tumble and Prices Poised to Test Higher Levels

Gold prices rebounded on Tuesday, surging higher 2.14%, and recapturing all of the losses experienced on Monday. The large drop in US yields under the key psychological level of 2%, was the catalyst that put downward pressure on the US dollar paving the way for higher gold prices. The drop in US yields was driven by a technical breakdown as there was no new information that was released on Tuesday as it pertained to the US economy.

Technical Analysis

Gold prices surged on Tuesday generating an outside day, which is a lower low a higher high and a higher close. Prices closed at a 4-day high and were driven by declining US yields. Prices sliced through resistance which is now short-term support near the 10-day moving average at 1,401. Resistance is seen near the June highs at 1,431. Medium term momentum is neutral as the MACD (moving average convergence divergence) histogram has stabilized near the zero-index level and has a flat trajectory which reflects consolidation. Short term momentum is also becoming neutral as the fast stochastic halted its downward trajectory and moved sideways reflecting consolidation.

US Yields Slide; Christine Lagarde is Likely New ECB Chief

The 10-year Treasury yield dove under 2% on Tuesday as concerns about global economic growth pushed investors toward safer assets. In Europe, the benchmark German bund yield fell to a new record low. The yield on the benchmark 10-year Treasury note fell 6 basis points lower at around 1.977%. Fears of an economic slowdown in Europe were exacerbated after the US government on Monday threatened to impose tariffs on $4 billion of additional euro zone goods in a long-running dispute over aircraft subsidies. Separately, European leaders have nominated International Monetary Fund Managing Director Christine Lagarde to become the next president of the European Central Bank, bringing an experienced crisis fighter to replace Mario Draghi.