Gold Price Prediction – Prices Break Out on Dollar Break Down

Gold prices surged higher on Thursday as the dollar headed south. U.S. Treasury yields moved lower despite a decline in jobless claims. Initial claims for unemployment benefits fell sharply last week, sinking below 500,000 for the first time since the Covid crash.

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Technical analysis

Gold prices moved higher on Thursday breaking out above trend line resistance. Support is now seen near former resistance, a downward sloping trend line near 1,799. Target resistance is seen near the Fibonacci retracement level of 38.2%, which is seen near 1,828. Additional support is seen near the 10-day moving average at 1,783 and then the 50-day moving average at 1,745. The 10-day moving average has crossed above the 50-day moving average, meaning that a short-term uptrend is now in place. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs when the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line).

Claims Fall More than Expected

First-time claims for unemployment insurance fell below 500,000 for the first time since the pandemic crisis. Initial claims totaled 498,000 for the week ended May 1, against the estimate of 527,000. That was down from the previous week’s total of 590,000, which saw a substantial upward revision from the initially reported 553,000. However, continuing claims actually ticked higher last week, rising 37,000 to just below 3.7 million. The four-week moving average for claims edged down to 3.68 million, the lowest since March 28, 2020, just as mass layoffs were beginning to combat the spreading coronavirus.