Gold Price Prediction – Gold Breaks Out as Momentum Turns Positive

Technical Analysis

Gold prices broke out and moved above resistance near the June highs at 1,310. The next level of target resistance on golds climb is the May 2018 highs at 1,325. Above that are the 2018 highs at 1,365. Support on the yellow metal is seen near the 20-day moving average at 1,290. Momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line. The MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices.

Trade Negotiations Between the US and China Continue

The relationship between China and the US are likely to deteriorate after the US filed criminal charges against Huawei Technologies.  The company is accused of committing fraud and stealing trade secrets from a rival US company. CFO Meng was also named in the indictment.  Meng was arrested in Canada last month and is undergoing extradition to the US.

Despite the US claims against Huawei trade negotiations continue.  However, eventually this issue will raise its head and Trump will need to decide about how to pursue Huawei. Press reports suggest that President Trump is expected to make an appearance to meet top Chinese trade negotiator and Vice Premier Liu.

The two-day FOMC meeting begins today, with the decision due Wednesday afternoon.  The FOMC is widely expected to keep rates unchanged. The futures market does not expect a rate hike anytime soon with May at 5% and June at approximately 20% chance of a rate increase.