Gold Price Prediction for January 29, 2018

Gold prices moved slightly higher and close at 19-month weekly high, and is now poised to test the June 2016 high close at 1,366.  Prices appear to be forming a daily bull flag pattern which is a pause that refreshes higher.  Support is seen near the 10-day moving average at 1,340. Short-term resistance is seen near the weekly highs at 1,366. Momentum has turned positive as the MACD (moving average convergence divergence) index recently generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The RSI is chopping around at elevated level and which reflects consolidation. The current reading of the relative strength index is 68, which is on the upper end of the neutral range but below the overbought trigger level of 70.

Gold prices have been moving in tandem of the EUR/USD which initially broke out but has been consolidating following the ECB’s interest rate decision, and President Trumps comments on Thursday in Davos which was dollar favorable.

ECB may not tweak guidance before June.

Some ECB council members want to wait until June, before the ECB starts to change its guidance on policy. According to a Bloomberg report citing unnamed people familiar with the matter, one fraction at the central bank wants to start tweaking the guidance already in March, while others want to wait until June before signaling that QE will be wind down. No decision has been taken yet. The ECB left the guidance essentially unchanged yesterday and Draghi stressed that another full QE program is still an option going ahead, but yields still jumped higher, indicating that the dovish central bank head is losing credibility. Doves and hawks continue to battle it out and so far the doves have kept the upper hand, meaning that there is less likely that QE will come to an end already in September and more likely that the ECB will gradually phase out net asset purchases in Q4 this year.