Gold Price Prediction – Prices Consolidate as the Dollar Rebound Following Weak Housing Data

Gold prices consolidated on Friday, forming nearly a daily Doji day which is a sign of indecision. Prices closed up 1.75% for the week and were buoyed by a weak dollar. The dollar rebounded on Friday but finished the week in the red, declining as a basket by 0.25% for the week.  Yields were nearly unchanged at the long end of the interest rate curve. Yields were weighed on by a weaker than expected existing home sales report.

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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.

According to the National Association of Realtors, sales of existing homes dropped 2.7% in April to an annualized rate of 5.85 million units. It was the third straight month of decline. Sales were 33.9% higher than April 2020 and were still 11% stronger than April 2019. The supply of homes for sale at the end of April was down 20%. There were 1.16 million homes for sale, representing a 2.4-month supply at the current sales pace.