Yahoo Finance Gold Price Prediction – Prices Trade Sideways as the Dollar Gains Traction
Gold prices traded sideways initially attempting to break out. Softer than expected European and UK economic data, weighed on the Euro and Sterling. This in turn buoyed the dollar which weighed on the yellow metal. Growth prospects around the globe remains weak, and the best house in a bad neighborhood appears to be the United States. This will keep the dollar buoyed and will hinder the upside in gold prices.
Technical Analysis
Gold prices attempted to move higher but closed near the lows of the trading session. Prices remain above short term support near the 5-day moving average at 1,309. A break below this level would lead to a test of target support near the 20-day moving average at 1,303. Prices remain in an uptrend and gold appears to be forming a bull flag pattern, but the daily pattern where the open and the close are near the same level with a higher wick is negative short term. Medium term momentum is negative as the MACD (moving average convergence divergence) histogram prints in the red with a downward sloping trajectory which points to lower prices. Short term momentum is also negative as the fast stochastic generated a crossover sell signal. The index is printing in the middle of the neutral range which takes some of the strength out of the signal.
UK Consumer Prices Where Weaker than Expected
The UK reported on Wednesday that January CPI came in weaker than expected. There was a drop in the headline reading by 1.9% year over year compared to expectations that it would fall by 1.8% year over year. The CPIH was expected to decline to 1.9% year over year but fell further to 1.8%. This continues a string of soft data ahead of Brexit.
Eurozone data was no better. The EU reported weaker than expected December Industrial Production. IP contracted by 0.9% month over month, compared to expectations that it would decline by 0.4% month over month. This dragged the year over year rate lower to -4.2% year over year versus expectations of -3.3% year over year.
This article was originally posted on FX Empire
