Gold Price Prediction – Prices Consolidate Ahead of No Confidence Vote

Gold prices moved higher on Wednesday ahead of the no confidence vote in the UK.  While May is widely expected to remain the Prime Minister, there is no clear cut plan on how to move forward. UK core inflation came in stronger than expected but the headline remains soft due to declining petroleum prices.

Technical Analysis

Gold prices edged higher but continue to remain range bound forming a bull flag continuation pattern that is a pause that refreshes higher. Short-term resistance is seen near the January 2019 highs at 1,298. Additional resistance is the June 2018 highs at 1,310.  Support on the yellow metal is seen near the 20-day moving average at 1,277. 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 is neutral. The fast stochastic is printing a reading of 80, which is on the overbought trigger level, but the trajectory is flat which reflects consolidation.

May is expected to survive a No Confidence Vote

Teresa May is expected to survive a no confidence vote mainly because there is no desire by the PM’s that voted no to the withdrawal bill to have an election.  May will attempt to cross party lines to determine what the major wants.  There are several directions this could go in including a new vote on Brexit. The EC has not offered any concessions that would allow the Brexit to occur.

If May does not survive the vote of confidence, the pound will tumble and riskier asserts such as stocks will decline.  If she survives, markets will continue to consolidation and a new position from the Tory party will emerge over the weekend and early next week.  If the no confidence vote succeeds gold prices will soar.

This article was originally posted on FX Empire

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