Gold Price Prediction – Gold Tumbles as Trend Points to Lower PricesHead and shoulder pattern could point to a gold reversal
Gold prices tumbled on Thursday giving back all of the gains from the week. In fact cold prices are now down on the week, and are hugging support levels. A rebound in the dollar weighed on gold prices. This came despite a rise in weekly jobless claims. Import prices rose according to the Labor Department which put pressure on yields paving the way for lower gold prices. The trend in gold prices might be turning as a moving average crossover and a head and shoulder reversal pattern could be pointing to a correction in the price of the yellow metal.
Gold prices tumbled on Thursday dropping slightly more than 1%, tumbling through support which is now seen as resistance near the 50-day moving average at 1,305. Support is seen near the 10-day moving average at 1,293. Prices could be forming a head and shoulder reversal pattern as prices now seem to be forming the right shoulder. The trend is pointing downward. The 10-day moving average recently crossed below the 50-day moving average which means that a short term down trend is now in place.
The whipsaw price action has quickly stalled positive momentum. The fast stochastic has recently generated a crossover buy signal and was pointing higher but today’s price action has stalled the stochastic in the middle of the neutral range. The MACD histogram is also moving sideways which reflects consolidation.
Jobless Claims Rise
The Labor Department Reported on Thursday that jobless claims rose 6,000 to 229,000 for the week ending March 9. This was slightly worse than expected as economists had expected claims to decline to 225,000. The four-week moving average of initial claims, which is less volatile slipped 2,500 to 223,750 last week. The Labor Department said that hiring is also being constrained by a weakening economy as stimulus from a $1.5 trillion tax cut diminishes.