Gold Price Prediction – Gold Forms Inside Day in Uptrend

Gold prices pause in low volatility uptrend
David Becker
Gold weekly chart, February 04, 2019

Gold prices rebounded on turnaround Tuesday, forming an inside day, as mixed European PMI data weighed on the euro. Home prices in the US continued to climb in December but they accelerating at the lowest rate in the 6-years.

Technical Analysis

Gold prices moved higher forming an inside day which is a lower high and a higher low which is a sign of indecision. Prices are in an uptrend with short-term support seen near the 10-day moving average at 1,306. Additional support on the yellow metal is seen near the 50-day moving average at 1,270. Resistance is seen near the January highs at 1,326. Short term momentum is negative as the fast stochastic recently generated a crossover sell signal. The fast stochastic has dropped from very oversold to the upper end of the neutral range which reflects consolidation. Prices are poised to hold near the 10-day moving average. Medium term positive momentum has decelerated, as the MACD (moving average convergence divergence) histogram prints in the black with a declining trajectory. Low volatility in an upward trend is a positive sign.

US Home Prices Rose but Are Decelerating

Home prices rose 4.7% in December. That is the smallest annual gain since August 2012. The median price paid for all Southern California homes sold in December was $515,000, up just 1.1% year over year. Prices are still rising because of the shortage of homes for sale, especially on the lower end of the market. But rising mortgage rates took their toll on affordability last year, causing sales to slow. Prices usually lag sales by several months.

European PMIs were mixed.  Both the euro and sterling are trading lower, despite the better than expected revisions of the composite and services PMI reading that were revised higher from the flash readings.  The EC service sector PMI rose to 51.2 from 50.8 which was the initial reading to match the December report.  The composite rose to 51.0 from 50.7 and 51.1 in December.

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