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Gold prices have mostly moved sideways over the last few weeks thanks to the dollar. But the technical indicators I'm watching show that the price of gold is nearing a breakout point...
A peak in the U.S. Dollar Index (DXY), which may still only be short-lived, allowed gold to show a reasonable gain in the last week.
Tame, just-released inflation numbers weighed on the dollar, as the market saw this to mean the U.S. Federal Reserve may not need to raise rates as aggressively as expected. That provided the fuel for gold to gain nearly $10 per ounce last week.
Even though gold gave up those gains today (May 14), the big picture for the yellow metal remains bullish.
Looking back over the last four years, we see that overhead price resistance remains around $1,375. But in the last two years, gold has spent the better half of the last two years above its 200-day moving average, with that being the case for nearly all of the last 10 months.
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Since mid-2016, gold's two-year moving average has been heading noticeably higher, and the gold price has spent nearly all of its time above that level.
So even if sentiment remains weak and gold "feels" like it's going nowhere, the reality is, in fact, a lot more encouraging.
I'll show you my latest gold price prediction, so you can see exactly how high gold prices will rise, right after I recap last week's gold price action...
The Price of Gold Benefited from a Weak Dollar
In the first part of last week, gold's challenges were a strengthening dollar and higher stock prices. But in the second half of the week, gold was able to turn around thanks to new dollar weakness, even as stocks powered higher.
Gold started the week on Monday (May 7) at $1,311 and closed at $1,314, as the DXY dialed back about 25 basis points.
But the DXY regained strength on Tuesday (May 8), and that pushed gold down to test $1,306 just before 4:00 a.m. Traders seemed to favor the dollar for safety, with the DXY peaking at 93.25 around 10:00 a.m.
The DXY would peak near 93.40 on Wednesday (May 9) in the early morning, causing gold to test even lower, this time touching $1,304. But from there, the dollar began its trend lower for the rest of the week.
Take a look at the dollar's slide beginning on Thursday...
Extended dollar weakness on Thursday and Friday (May 11) helped gold close at $1,321 on Thursday, then push to $1,325 by early Friday. But some profit-taking dominated gold markets, and the yellow metal would sell off to end the week at $1,318.
But last week's gold price movement pushed the metal deceptively higher, and new catalysts will fuel it to my latest gold price target in 2018...
My Gold Price Prediction Shows How High the Metal Can Go
About the Author
Peter Krauth is the Resource Specialist for Money Map Press and has contributed some of the most popular and highly regarded investing articles on Money Morning. Peter is headquartered in resource-rich Canada, but he travels around the world to dig up the very best profit opportunity, whether it's in gold, silver, oil, coal, or even potash.