Gold Price Prediction – Prices Consolidate as the Dollar Trades Sideways

Key Insights

• Gold prices continued to trade sideways.
• The dollar was mixed, rallying against the yen but sliding versus the Euro.
• Treasury yields were nearly unchanged despite weak housing data.

Gold prices continued to consolidate as the dollar traded mixed. The yield differential widened versus the yen allowing the greenback to gain traction versus the Japanese currency. Despite weaker than expected U.S. existing home sales, U.S. treasury yields remained stable. The CME Fed Watch shows a 95% chance of a 75-basis point Fed hike at the July Fed meeting.

According to the National Association of Realtors, existing Home Sales declined in May, falling by 3.4% to an annualized rate of 5.41 million units. Sales were 8.6% lower than in May 2021. This is the weakest reading since June 2020. The drop in demand was likely a function of higher mortgage rates. During May, the average rate on the 30-year fixed mortgage rose from around 4% to 5.5%.

Technical Analysis

Gold prices traded sideways and remained below former support, which is now resistance near the 200-day moving average at 1,843. The yellow metal support is now near the June lows at 1,805.

Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal.

Medium-term momentum is flat. The  MACD (moving average convergence divergence) histogram has a decelerating trajectory pointing to consolidation.