Gold Price Prediction – Prices Rebound at Support as Volatility Remains Elevated

David Becker
·2-min read

Gold prices rebounded slightly ahead of support levels as the dollar eased and US yields moved sideways. Gold prices were able to gain traction as riskier assets like stocks moved higher. The correlation between gold and stocks has been positive, as the dollar has been the safe-haven instrument that has gained traction during times of market turmoil.

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Technical analysis

Gold prices moved higher and bounced at support near the 100-day moving average at 1,847. Resistance is seen near the 10-day moving average at 1,909. The 10-day moving average crossed through the 50-day moving average which means a short-term downtrend is in place. 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). Short-term momentum has turned positive as the fast stochastic recently generated a crossover buy signal. The current reading on the fast stochastic is 15, below the oversold trigger level of 20 which could foreshadow a correction.

Volatility has Been Elevated

The Cboe Volatility Index, a measure of expected swings in the S&P 500 as well as gold, climbed last week. The GVZ gold volatility index increased by slightly more than 9% last week Investors’ concerns about rising or elevated levels of coronavirus infections, the uneven pace of economic recovery, political risks and continued tensions between Beijing and Washington have increased the turbulence in the market this month.

This article was originally posted on FX Empire