Gold Price Prediction – Gold Prices Trend Higher as Geopolitical Issues Brew

Gold rallies on lower US rates
David Becker
Comex Gold

Gold prices surged higher touching a fresh 6-year high and poised to test the August 2013 highs near 1,423. A break of this level would allow gold prices to test much higher levels. Prices are clearly overbought but geopolitics has reared its ugly head just as the Fed reported that interest rates would likely move lower. With yields continuing to decline, and the dollar falling out of favor as a safe haven, gold prices are experiencing upward momentum.

Technical Analysis

Gold prices broke out this week and surged 4.25%, as the Fed pointed to lower rates in the future. Prices cracked through resistance levels and is poised to hit fresh 7-year highs at 1,433. Support on the yellow metal is seen near 10-day moving average at 1,350 which coincides with the breakout level. Positive momentum continues to accelerate as the fast stochastic and the RSI (relative strength index) rise. Both of these indices are showing that gold prices are very overbought. The current reading on the fast stochastic is 92, well above the overbought trigger level of 80. The RSI is printing a reading of 84, above the overbought trigger level of 70 and both are signally a potential correction. The MACD (moving average convergence divergence) histogram is printing in the black with an upward sloping trajectory which points to accelerating positive momentum.

Trump Declares False Start

President Trump ordered a military strike on Iran but thought better of the situations as he was told there could be as many as 150-deaths with this retaliation. The Iranian shot down a unmanned drone over the Strait of Hormuz.  Reports suggest Trump warned Iran that an attack was imminent and called for talks, giving Iran a short period of time to respond.  The 10-year traded below 2% for the first time yesterday since November 2016.  The interest rates reduction is now priced in by mid-January 202 and a 4th by January 2021.

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