Gold Price Prediction – Prices Consolidate as Gold Volatility Slides

Gold prices edged higher on Tuesday, but remain rangebound. The weekly price chart continues to form a bull flag pattern which is a pause that refreshes higher. The dollar moved lower for a second consecutive trading session but this recent price action has failed to buoy the yellow metal. US yields edged lower, after rising on Monday due to outflow into US stocks. Gold implied volatility continued to head lower, breaking down to 21% which is the lowest seen since the beginning of March 2020. Treasury Secretary Steven Mnuchin testified alongside Federal Reserve Chairman Jerome Powell in front of the Senate on Tuesday.

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Technical Analysis

Gold prices moved higher but remained rangebound. Declining levels of volatility will likely mean further consolidation. Support is seen near the 10-day moving average at 1,716. Resistance is seen near the weekly highs at 1,765.

Short term momentum is negative as the fast stochastic generated a crossover sell signal. This occurred near overbought territory at 80, and the index is now printing a reading of 76, which reflects accelerating negative momentum. Medium-term momentum is positive as the MACD (moving average convergence divergence) index recently generated a crossover buy signal. The MACD histogram is printing in the black with an upward sloping traject that does not have a sharp slope.

Mnuchin and Powell Testify

Treasury Secretary Steven Mnuchin testified alongside Federal Reserve Chairman Jerome Powell, and both men stressed that economic data from states that are beginning to reopen will determine the next steps in the federal response. Mnuchin told senators Tuesday that his department and the Fed are prepared to take losses in certain scenarios on the capital remaining to be distributed from the CARES Act.