Gold Price Prediction – Gold Continues to Slip, as Negative Momentum Accelerates

Gold prices continued to decline on Wednesday, as upbeat data from China led to a risk off trade which weighed on prices. US yields consolidated and so did the dollar, which allowed gold to trade in a tight choppy range. Japanese data was softer than expected but that failed to weigh on the yen which helped the yellow metal remain somewhat buoyed.

Technical Analysis

Gold prices continued to ease lower on Wednesday, making a lower low and lower close which is a sign of a downtrend.  Prices broke down through trend line support which is now seen as resistance near an upward sloping trend line near 1,284. Additional resistance is seen near the 10-day moving average at 1,291. Support is seen near an upward sloping trend line near 1,260.

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). The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices and accelerating negative momentum. The fast stochastic also generated a crossover sell signal, which points to accelerating negative moemtnum. The current reading on the fast stochastic is 10, which is below the oversold trigger level of 20, and could foreshadow a correction.

Chinese Data Was Stronger than Expected

China reported several key data points which helped buoy riskier assets. March Industiral production increased by 8.5% compared to expectations that it would increase by 5.9% year over year. Retail sales rose 8.7% year over year beating expectations of 8.4%. GDP rose 6.4% year over year compared to 6.3% expected.  Japan’s trade surplus was larger than expected at 528.5 billion yen as imports were weaker than expected.  The 1.1% rise in imports was less than half expectations but imports were even worse which will likely weigh on Q1 GDP. February’s industrial output, increased by only 0.7%, which was also softer than expected.  The tertiary index, for January’s, saw a 0.6% increase unwounding all of January’s gain.