Gold Price Prediction – Gold Prices Traded Flat Despite Risk-Off Market Sentiment

Key Insights

  • Gold prices held steady despite a drop in yields.
  • Fed expected to have two 50-basis point hikes. 
  • Treasury yields dropped in risk-off sentiment.

Gold prices remained little changed despite the downward slide in yields. The dollar rallies to two-decade highs as investors place bets longing the dollar. Benchmark yields erased gains as investors piled into bonds due to the sell off in stocks.

The Dow Jones and Nasdaq saw huge daily declines as inflation concerns rose following earnings reports. The ten-year yield slid by 9 basis points today. 

Residential housing starts fell by 0.2% in April due to rising mortgage rates. The 30-year loan increased to 5.3% last week from 2.94 a year ago. Spiraling inflation combined with high material prices has weighed on the housing market. 

Philadelphia Fed President Harker stated that the Fed will have two 50-basis point hikes in June and July at the FOMC meetings.

Technical Analysis

Gold prices will remain rangebound in light of Fed rate hike expectations. Gold prices face downward momentum toward the 1,800 level and are headed toward $1780, which was near the low of today’s trading session.

Support is seen near the May 16th lows near 1788. Resistance is seen at the former support level near the 200-day moving average of 1,838. 

Short-term momentum turns negative as the Fast Stochastic might generate a crossover sell signal. Prices remain oversold as the fast stochastic prints a reading of 22.22 below the oversold trigger level of 20.

Medium-term momentum has turned negative as the MACD generates a crossover sell signal. This occurs as the 12-day moving average minus the 26-day moving average crosses below the 9-day moving average of the MACD line.

The  MACD (moving average convergence divergence) histogram has a negative trajectory that points to lower prices.