Yahoo Finance Gold Price Prediction – Gold Consolidates After Breaking Down as Momentum Turns Negative
Gold prices moved lower and are consolidating on Monday after tumbling on Friday as the dollar gained traction. The ECB and the Federal Reserve met last week and are on diverging paths as the Fed continues to raise rates and normalize. Higher U.S. interest rates are making the dollar more attractive and gold prices more expensive in other currencies. As long as the dollar continues to make headway, gold prices will have a difficult time gaining ground. The ECB on the other hand, kept rates unchanged but discussed the phasing out of their quantitative easing. QE will be reduced by half in September and will phase out completely as of December 2018. Just because QE will be terminated does not mean that the ECB will begin to increase interest rates. The ECB’s dovish bent kept a lid on the EUR/USD which put downward pressure on gold. Moving forward, the movements of the dollar will continue to drive gold. With trade issues continue to percolate, prices could remain buoyed as traders use gold as a safe haven currency.
Gold Prices Broke Down
Gold broke down through trend line support which is now seen as resistance near 1,288. Target support on the yellow metal is seen near the December 2017 lows at 1,236. Momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal as the MACD line crossed below the MACD signal line (the 9-day moving average of the MACD line). The AMCD histogram is printing in the red with a downward sloping trajectory which points to lower prices. Generally when prices tumble, there is consolidation followed by another leg lower. The fast stochastic also generated a crossover sell signal in the middle of the neutral range. This reflects negative momentum, and prices are above the oversold trigger level of 20 which means there could be further room for gold prices to run.
This article was originally posted on FX Empire
