Gold Price Prediction – Prices Rise and Continue to Break Out

Gold prices continued to rise on Tuesday after breaking out above trend line resistance on Monday. Risk-off sentiment ahead of Tuesday’s U.S. Senate runoff reversed course. The dollar continued to trend lower, hitting a fresh 33-month low while U.S. yields surged higher. Strong than expected U.S. manufacturing data helped buoy yields and weighed on the greenback.

Trade gold with FXTM

Technical analysis

Gold prices moved higher, breaking out above trend line resistance and testing resistance near the November highs near 1,950. A close above this level will lead to a test of the August highs at 2,075. Support is near the 10-day moving average near 1,892. The 10-day moving average crossed above the 50-day moving average, which means a medium-term uptrend is now in place.  Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. The current reading on the fast stochastic is 95, above the overbought trigger level of 80, foreshadowing a correction. Medium-term momentum is positive as the MACD (moving average convergence divergence) histogram prints in the black with a positive trajectory, which points to higher prices.

US ISM Comes in Better than Expected

U.S. manufacturing activity increased to the highest level in nearly 30-months in December. According to the Institute for Supply Management (ISM), its national factory activity index rebounded to a reading of 60.7 last month. That was the highest level since August 2018 and followed 57.5 in November. Expectations were for the index to slip to 56.6 in December. Most of the gains were due to a strong rebound in supplier deliveries. This measure rose to 67.7 in December from 61.7 in November.