Gold Price Prediction – Prices Consolidate Following Monday’s Rally on Weak Home Sales

Gold prices moved in a very tight range, dipping slightly on Tuesday following Monday’s robust rally. The dip in gold came despite a selloff in the dollar which eased in tandem with U.S. Yields. Both the 10-year U.S. yield and the 2-year yield declined allowing the yield differential with the EU to move in the EU’s favor. U.S. Existing Home Sales declined in May, as high prices continue to impact sales.

Technical analysis

Gold prices nearly unchanged on Tuesday after a strong rallyh on Monday. Prices remain well above support near the and upward sloping trend line that comes in near $1,730. Resistance is seen near the 10-day moving average at 1,830.  The 10-day moving average has crossed below the 50-day moving average which means that a short-term downtrend is now in place. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Prices are oversold. The current reading on the fast stochastic is 12, below the oversold trigger level of 20 which could foreshadow a correction. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) as the MACD (moving average convergence divergence) index generated a crossover sell signal. The MACD histogram is printing in negative territory with a declining trajectory which points to lower prices.

Existing Home Sales Slip

U.S. Existing homes dropped for the fourth straight month due high prices and a tight market. According to the National Association of Realtors, existing-home sales fell 0.9% in May to an annualized rate of 5.8 million units. That is the fourth straight month of declines. The 5.8 million rate is modestly above pre-pandemic levels. Sales were 44.6% higher from the same period a year ago, but that is compared to May 2020 as the pandemic accelerated.