Gold Price Prediction – Gold Slips as the Dollar Continues to Gain Traction

Gold slips as the dollar generates headwinds
David Becker
Comex Gold

Gold prices moved lower on Monday as the dollar continued to gain traction relative to most major currencies. The euro appears to be breaking down against the greenback and this price action generally has a negative pull on gold prices. Gold has been holding up well in the face of a rising dollar, that makes gold more expensive in other currencies. Bernstein a US quantitative fund, made a recommendation to clients today to purchase the yellow metal.

Technical Analysis

Gold prices moved lower on Monday, hovering near short-term support near the 5-day moving average at 1,310. Additional support on the yellow metal is seen near the 20-day moving average at 1,301. Resistance is seen near the January highs at 1,325. Prices remain above the prior breakout of the range seen in early January at 1,298. The up trend is still in place. Medium term momentum is negative as the MACD (moving average convergence divergence) index recently generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the red with a declining trajectory which points to lower prices. Short-term momentum has reversed. The fast stochastic generated a crossover buy signal in the middle of the neutral range. This buy signal is not strong as the fast stochastic is in the middle of the neutral range which reflects consolidation.

Bernstein which is a global research firm announced that the firm’s global quantitative trading strategy group wrote a report that was titled “a strong case for holding gold.” The firm is telling investors they should reduce risk by purchasing gold. According to CNBC, Bernstein is tracking two key measures, both of which are at levels not seen since World War II which are global government debt and central bank buying of gold.

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