Gold Price Prediction – Prices Slump Despite a Drop in the Greenback

Gold prices moved lower reversing Monday’s rally but remain in a tight range as the dollar moved lower. US yields were nearly unchanged despite a report from the Atlanta Fed which shows a nearly 53% drop in Q2 GDP. Betting markets are now favoring Joe Biden to become the next president of the United States. Gold prices are also beginning to incorporate a change in the US Presidency. PredictIt now sees the odds of a Democratic president at 54%, up from a low near 40% in late February.

Technical Analysis

Trade gold with FXTM

Gold prices moved lower slipping through support near the 10-day  moving average at $1,727,  Target support is still an upward sloping trend line that comes in near $1,699. Below that level is support near the 50-day moving average at $1,693. Additional resistance is seen near the May highs at 1,754. Short-term momentum has turned positive as the fast stochastic recently generated a crossover buy signal. Medium-term momentum is negative but turning neutral as the MACD (moving average convergence divergence) histogram is printing in the red with a rising trajectory that points to consolidation.

Q2 GDP is Forecast to Decline Sharply

The Atlanta Fed GDPNow outlook is now showing a 52.8% in growth. That follows data from the Institute for Supply Manufacturing showed just 43.1% of firms seeing an expansion in May. The Atlanta Fed anticipates personal consumption expenditures, which make up 68% of the nation’s gross domestic product, to fall 58.1% in the Q2. Gross private domestic investment, which accounts for 17% of GDP, is now projected to slide 62.6%.