Gold Price Prediction – Gold Forms Bull Flag Pattern and Is Poised to Move Higher

Gold prices were buoyed on Monday as the situation in Hong Kong is deteriorating.  Flights were canceled Monday after protestors engrossed the main airport terminal building, leading to further disruptions.  This on top of the worsening trade situation appears to be helping the yen as well as the yellow metal.

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Technical Analysis

Gold prices moved higher and are forming a bull flag consolidation pattern which is a pause that refreshes higher. Resistance is now seen near the March 2013 highs at 1,616. Support is seen near the 10-day moving average at 1,466. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal in overbought territory. The fast stochastic is flattening which is likely to lead to consolidation. The current reading on the fast stochastic is 91 well above the overbought trigger level of 80 which could foreshadow a correction. Medium-term momentum is positive as the MACD (moving average convergence divergence) recently generated a crossover buy signal. The MACD histogram is printing in the black with an upward sloping trajectory which points to higher gold prices.

Turmoil in Hong Kong Lifts the Yellow Metal

The heightened tension in Hong Kong has led to criticism from the mainland, with a senior official saying the protestors had committed a serious crime and showed signs of terrorism.  The Hong Kong economy is already suffering from the US-China trade war, and these ongoing protests will only make things worse. The yuan was fixed weaker Monday.  Recent moves support the view that China is not weaponizing the yuan, but rather letting market forces drive its movements.  This is not the view of the Trump administration which is looking to fight the trade war with claims that the Chinese government is manipulating the currency markets.