Gold Price Prediction – Prices Slip on Strong Dollar and Yields

Gold prices moved lower on Monday, starting the week on a sour note. This move comes as the dollar moves higher in tandem with US yields. As yields rise, the yield differential moves in favor of the greenback, helping to buoy the dollar and weigh on the yellow metal. According to the latest commitment of traders report, hedge funds added to both long and short-positions in futures and options according to the latest commitment of traders.

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Technical analysis

Gold prices moved lower but remain rangebound, although they appear to be poised to test lower levels. Resistance is seen near the 10-day moving average at 1,732. Target resistance is now seen near the 50-day moving average at 1,781. Additional support is seen near the June lows at 1,670.   Short-term momentum has flipped and is now negative as the fast stochastic generated a crossover sell signal, just above the oversold trigger level, and has now moved lower.  The current reading on the fast stochastic is 76, just below the overbought trigger level of 80, foreshadowing a correction. Medium-term momentum is turning negative. The MACD histogram is printing in positive territory with a declining trajectory which points to lower prices.

Hedge Funds Add to Both Long and Short Positions

According to the most recent commitment of traders report from the Commodity Futures Trading Commissions, hedge funds added to both long and short positions in futures and options. The current open interest shows that hedge funds are long, nearly double the number of futures and options contracts than short positions in futures and options.