Gold Price Prediction – Prices Move Lower as Yields Rebound

Gold prices dropped more than 1.25% on Thursday, as the dollar gained traction and US yields moved higher. Riskier assets seemed to benefit from the lack of tip for tat trade barbs. This allowed stock prices to move higher despite a softer than expected US to pend home sales report. Fewer Americans signed contracts to buy homes in July, signaling that the housing market has yet to enjoy a strong bounce from lower mortgage rates. The US 30-year yield hit a fresh all-time low on Wednesday below the 2% level. The US treasury is now considering a longer-term bond to take advantage of the lower yields. This could include a 100-year bond.

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Technical Analysis

Gold prices moved lower on Thursday dropping 1.3%.  Short-term resistance is seen near the August highs at $1,555. Support on the yellow metal is seen near the 10-day moving average at 1,517. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the red with a declining trajectory which points to lower prices.

Pending Home Sales Fall

The National Association of Realtors reported that its pending home sales index fell 2.5% to 105.6 in July. The index has slipped 0.3% from a year ago. With trade tensions and fears of a possible recession intensifying, a robust job market hasn’t been enough to strengthen sales. Sales have also been hampered by the lack of available homes on the market, which has contributed to home prices climbing faster than incomes. The long-standing shortage of sales listings and persistently high prices have blunted the benefits of lower mortgage rates nearing all-time lows.