Gold Price Prediction – Gold Rebounds on BrexitBrexit vote buoys gold
Gold prices moved higher on Tuesday, rallying as the Euro gained traction. News that a modified Brexit deal failed to pass through the UK pariliament, lifted the Euro but whipsawed the pound. The dollar was unchanged, as yields moved lower paving the way for higher gold prices. US yields moved lower despite a stronger than expected US CPI report. Most of the focus of the currency markets on Tuesday was Brexit.
Gold prices moved higher on Tuesday pushing up above the 10-day moving average which was prior resistance seen near 1,296. New resistance levels are seen near the 50-day moving average at 1,302. Short term momentum has turned positive. The short-term MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 5-day moving average minus the 13-day moving average) crosses above the MACD signal line (the 6-day moving average of the MACD line). The fast stochastic also recently generated a crossover buy signal. The fast stochastic has exited oversold territory which is a sign of accelerating positive momentum. The current reading of 26 is above the overbought trigger level of 20.
A Brexit Vote is in the Cards
The UK Parliament voted against Teressa May’s Brexit Withdrawal Bill. It was another defeat and likely delays an exit. There are reports that the bill was change but there is no evidence that it was altered. Reports are that May was able to secure some new terms to ease fears that the Irish backstop.
Separately, there was a deluge of robust data out of the UK. January GDP came in stronger than expected to rise 0.5% compared to expectations that it would come in at 0.2%. There was also a 0.6% increase in Industrial Production and a 0.8% increase in output. These easily surpass the 0.2% gain expected in both IP and IO. Construction output rose 2.8% year over year.