Gold Price Prediction – Gold Prices Ease but Trend Points to Higher Prices

Mixed ZEW survey helps cap gold prices
David Becker
Risk Aversion Remains As Major Catalyst, Gold Reports Minor Losses
Risk Aversion Remains As Major Catalyst, Gold Reports Minor Losses

Gold prices eased slightly but hold near support after breaking out of trend line resistance on Monday. While riskier assets rebounded on Turn around Tuesday, the feeling that volatility has returned has infiltraded the gold market. The trade dispute between the US and China continues to drive the news. Tweets and comments from the White House Administration as well as President Trump are attempts to buoy riskier assets. Gold prices remain buoyed, despite an uptick in US yields, which rebounded slightly on Tuesday. The German ZEW survey was mixed, allowin the dollar to gain some traction, UK employment data was also mixed.

Technical Analysis

Gold prices eased slightly on Tuesday, falling back after breaking out on Monday. Prices broke out above trend line resistance near 1,294, which is now seen as short-term support. Additional support is seen near the 50-day moving average at 1,291, and then the 10-day moving average at 1,283. Resistance is seen near the April highs at 1,310. Momentum remains positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory which points to higher prices. The fast stochastic is accelerating higher, and is widening from the slow stochastic which reflects accelerating positive momentum.

German ZEW Survey Improved

The German ZEW survey which is an assessment of the current situation improved from 5.5 to 8.2, which is more than expected.  It is the first increase since last September.  Not all the news was good news. The future expectations component contracted into negative territory to -2.1 where it had been since April 2018.  Separately, the UK reported average weekly earnings that rose less than expected. Earnings increased to 3.2% year over year, compared to expectations they would rise to 3.4%.  Ex-bonus earnings were in line with expectations rising to 3.3% year over year.  Unemployment fell to 3.8%, while employment rose 99k less than the 140K expected.

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