Gold Price Forecast Today Based on These Technical Indicators

Our new gold price forecast today uses technical analysis to shed light on where gold's short- and mid-term price path is going.

Gold has had a bit of roller coaster action over the past few months. In October, the gold price did an almost complete round trip: It started the month around $1,107, blasted up to $1,185 by mid-month, and finally gave it all back by month's end.

If we can point the finger at one particular driver, it's almost unarguably the U.S. dollar.

As we approached month's end, when the U.S. Federal Reserve (yet again) signaled a December rate hike, the dollar got a boost and in turn weighed on the price of gold.

Then came the October jobs report Friday, Nov. 6 (today). And it hit gold like a ton of bricks...

To get a better gold price forecast for the end of 2015, let's dig a little deeper...

Gold Price vs U.S. Dollar Chart

Here's a chart that shows how the gold price and the U.S. dollar have behaved over the last six months:

gold forecast

This shows clearly the inverse relationship between these two assets, at least on a short-term basis. While the percentage changes are obviously not the same, the directional moves are undeniably linked.

We can see that the last week of October, the U.S. dollar shot up on Fed Chairwoman Janet Yellen's rate hike comments. Meanwhile, gold prices cratered from $1,185 to hit $1,085 by Nov. 6. Their reactions are near perfect mirror images of each other.

So what does this mean for our gold price forecast?

Gold Price Forecast: Look to the U.S. Dollar

The dollar is the best near-term indicator today.

What's especially worthy to note is where the U.S. Dollar Index sits right now. As it turns out, it's right at a crucial point.

US gold price

A move of the dollar index back down from 98 (a level that acted twice as resistance in July and August) would help the gold price head higher.

But instead, it pushed above 98 to 99.3 early Friday, Nov. 6 (not shown in above chart). That pummeled gold and gold stocks considerably.  So we're currently at a key level in the dollar index, and it's worth keeping a close eye on exactly what it does next.

If it pushes above 100, it may return to a new bull run. That would most likely push gold lower still. If instead it reverses, that would be likely to support gold over the next weeks and months.

How These Technicals Shape the Gold Price Forecast

The price of gold declined in 13 of the previous 15 days leading up to Nov. 4. That sounds very bearish, but according to research by Sentimentrader.com, this has only occurred twice in the last 40 years.

As well, there were 13 times that the gold price was down 12 out of 15 days. In these instances, gold rallied in the following week 11 of those 13 times. This type of behavior suggests capitulation, which is a potential positive going forward.

Another important technical indicator for gold prices is the Relative Strength Indicator (RSI).

U.S. Gold Price forecast

As you can see in the upper portion of this chart, the RSI is currently at about 30, and that's near where it typically tends to mark a bottom and reversal in the gold price.

But it doesn't account for the action immediately following the U.S. jobs report. After the release, the gold price got hammered, dropping from $1,108 to $1,085, losing $23 or 1.67% in minutes.

The dollar's surge was the culprit.

Now the level to watch in gold is $1,084 an ounce. That's the low point since gold began correcting in 2011, reached this past Aug. 5.

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If that level holds, then we'll have had a successful retest of the lows, and we may well have seen the final bottom.

So as we head further into November, keep a close eye on the dollar; the U.S. Dollar Index is likely to be the biggest influence on our next gold price prediction.

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