Gold Price Prediction – Prices Fall but Hold Support as the Dollar Rises

Gold prices moved lower but bounced from session lows and closed above trend line support. The yellow metal faced headwinds as the dollar rallied. U.S. Yields were mixed as the 10-year attempted to move higher. The U.S. 2-Year Treasury yield gained traction helping the dollar rally and generating headwinds for the yellow metal. More robust than expected Home prices figures released on Tuesday by S&P and Case Shiller buoyed yields.

Technical analysis

Gold prices moved lower but bounced from support near and upward sloping trend line that comes in near $1,762. A break of this level would lead to a test of target support near an upward sloping trend line that comes in near $1,733.  Resistance is seen near the 10-day moving average at 1,778.  The 10-day moving average has crossed below the 100-day moving average, meaning that a short-term downtrend is now in place. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Prices are oversold. The current reading on the fast stochastic is 8, below the oversold trigger level of 20 which could foreshadow a correction. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) as the MACD (moving average convergence divergence) index generated a crossover sell signal. The MACD histogram is printing in negative territory with a rising trajectory which points to consolidation.

Home Prices Surge in April

According to the S&P CoreLogic Case-Shiller National Home Price Index, home prices rose 14.6% in April, up from a 13.3% increase in March. Among larger cities covered by the index, the 10-city composite was up 14.4% year over year, from 12.9% the previous month. The 20-city composite was 14.9% higher, up from 13.4% in March. Phoenix, San Diego, and Seattle reported the highest year-over-year gains. All were up more than 20% from the year before.