Gold Price Prediction – Prices are Breaking Out

Gold prices surge on surprise IFO survey
David Becker
Comex Gold, WTI Crude Oil, Natural Gas

Gold prices surged on Monday, as the euro gained traction following a stronger than expected German IFO report. Gold prices held up despite Friday’s drop in the euro and rally in the greenback. The weaker than expected PMI figures drained the European currency. The US 10-year yield tumbled on Monday, declining down to the 2.40% level which is the lowest its been since December of 2017. The German bund yield also declined but the drop was less than the drop in US yields. The German 10-year yield is now trading below zero. This has paved the way for higher gold prices.

Technical Analysis

Gold prices rallied on Monday climbing 0.7% and poised to test target resistance near a downward sloping trend line that comes in near 1,345.  Supports is seen near the 10-day moving average at 1,307. Additional support is seen near the 10-day moving average at 1,306. The 10-day moving average has crossed above the 50-day moving average which means that a short term up trend is now in place. Momentum has turned positive as the MACD (moving average convergence divergence) index 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 MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices and accelerating positive momentum. The fast stochastic surged and is printing a reading of 83, above the overbought trigger level of 80 and could foreshadow a correction.

German Data Comes in Stronger Than Expected

The German IFO survey came in stronger than expected and the February IFO was revised higher. According to the survey,  the currency business environment improved to 99.6 from a revised 98.7.  The expectations component rose to 95.6 from 93.8.  The overall index measure was 103.8 after from 103.4.

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