Gold Price Prediction – Prices Break Down as Momentum Turns Negative

Gold prices moved lower on Tuesday as the dollar gained traction, breaking out to a fresh 4-month high. Since gold is quoted in U.S. dollars, a strong dollar makes gold prices more expensive in other currencies. Therefore gold prices need to adjust lower. U.S. yields also rose but failed to hold higher levels. The rally in the greenback came as U.S. consumer confidence rose in March to a 12-month high.

Trade gold with FXTM

Technical analysis

Gold prices moved lower and appeared to be breaking down. Support is seen near the June lows at 1,670. Resistance is seen near the 10-day moving average at 1,728. Target resistance is now seen near the 50-day moving average at 1,778. Short-term momentum has flipped and is now negative as the fast stochastic generated a crossover sell signal. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index 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 MACD histogram is printing negative territory with a declining trajectory which points to lower prices.

Consumer Confidence Surges

U.S. consumer confidence rose in March to a 12-month high as Americans grew more upbeat about the vaccine’s rollout. The Conference Board’s index of consumer confidence surged to 109.7 from a revised 90.4 reading in February. That was the sharpest one-month gain in nearly 18 years and exceeded the most optimistic forecast. A fresh round of fiscal stimulus also likely helped boost sentiment and is projected to bolster economic activity and the job market in the coming months.