Although gold prices consolidated last week, they've formed a new higher level.
The price of gold has traded in a range near $1,200 since mid-August.
But now gold prices are hovering around $1,223, with a new floor possibly around the $1,220 level.
That sneaky gain in the gold price came thanks to a confluence of factors.
Geopolitical tensions with Saudi Arabia, trade frictions with China, Italy-EU budget strains, and a downbeat IMF economic outlook all likely supported the rise in gold.
But perhaps even more impressive is gold's rally despite the twin headwinds of a stronger dollar and a higher 10-year bond yield.
These are direct competitors to gold, and both were stronger this week. Gold prices rising along with them is a potential signal that this new strength in the yellow metal could have staying power.
Let's take a look at what moved the gold price last week - and what it means for my latest gold price prediction for November...
Gold Prices Are Quietly Rising
It's been an impressive performance so far from gold over the past week.
The metal has jumped from around $1,200 to $1,223 and traded in a narrow range between $1,220 and $1,232 on an intraday basis.
By midweek, the dollar was rallying, with the U.S. Dollar Index (DXY) up to 95.6 after bottoming on Tuesday (Oct. 16) around 94.8.
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The tensions described above get the credit for the stronger dollar and rising 10-year yield.
You can see the steady rise in the DXY over the last week right here...
The rally took the DXY to 96 by late Thursday (Oct. 18). By early Friday (Oct. 19), it finally broke above that level but was unable to maintain it and quickly fell back to 95.7 by week's end.
After the strong sell-off in stocks from early October, stocks did manage to get some relief early in the week. But by Thursday and into Friday, they backed off again as the dollar and bond yields rallied along with gold.
Gold prices rising as geopolitical tensions and economic uncertainty ratchet up are bullish signs, and that's especially the case in the face of a stronger dollar.
Here's where I see gold prices heading to next...
My November Gold Price Prediction
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The dollar had the wind at its back over the last few days, and that's pushed it higher.
Both the relative strength index (RSI) and moving average convergence divergence (MACD) momentum indicators have turned up from neutral levels and are confirming the dollar's move higher. What's more, the DXY has just managed a higher high (though not by much) above previous resistance.
Normally this would worry me, as I'd expect it to constrain gold prices. But the metal and its stocks have both been moving higher along with the dollar, so we know gold prices are rising in spite of the dollar.
The dollar is likely also being supported by the rise in bond yields. The 10-year bond yield has broken out and continues to rise.
Shorting bonds at this juncture makes sense, and I believe yields will generally work their way higher over many more years ahead.
You can see how yields are surging above their last ceiling and showing no signs of slowing down.
Now, for gold itself.
Gold has clearly broken out above its previous resistance around $1,210, which I've outlined here...
Now we need to watch for a break above $1,235 for possible confirmation of a new rally. Right now, we're only a few dollars away, and the momentum indicators, the RSI and MACD, are confirming the current move so far.
As for gold stocks, the story is similar.
We've had a clear break above recent resistance, and the VanEck Gold Miners ETF (NYSEARCA: GDX) could consolidate a bit around $20. But it needs to get back above at least $21, which was support going all the way back to March last year.
Momentum does seem to be on the side of gold stocks, and despite a decent run since early September, they do not look overbought.
And finally the Gold Miners Bullish Percent Index.
Although it moved sideways most of last week, it did jump to a new higher level on Monday and then maintained it.
We could see a bit of a pause after recent gains, but overall, the technical picture looks good for both gold and gold stocks.
As long as gold remains above its new support of $1,220, I expect it to continue to rise to $1,235 and even higher as it gathers momentum.
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