Gold Price Prediction – Prices Break Out of Cup and Saucer Pattern

Gold prices appear to be breaking out of a cup and saucer pattern, closing a fresh 6-year higher. The movement of the coronavirus that has spread throughout Wuhan China, is driving a fresh round of profit taking in riskier asste and buoying gold prices. Gold rallied nearly 30% after the SARs virus kicked off in 2003. SARs took about 6-months to contain. Hedge funds barely changed their positions in futures and options. Sales of new US single-family homes unexpectedly fell in December, likely held down by a shortage of more affordable homes.

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Technicals

 

Gold prices moved higher breaking out of a cup and saucer continuation pattern. This is generally a pause that refreshes higher. Short-term support is seen near the 10-day moving average at 1,560. Resistance is seen near the January highs at 1,611. The movement of the relative strength index (RSI) is positive and shows that the trend is moving higher with accelerating positive momentum. The current reading of 73, is above the overbought trigger level of 70, which could foreshadow a correction.

Medium-term momentum is poised to turn positive as the MACD (moving average convergence divergence) index is above to generate 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-red and poised to cross above the zero index level which is a buy signal. The fast stochastic also generate a crossover buy signal which is a sign of accelerating positive momentum.

New Home Sales Slip

New Home sales declined according to a report from the US Commerce Department. New home sales slipped 0.4% to an annual rate of 694,000 units last, with sales in the South dropping to more than a one-year low. It was the third straight monthly decline in sales. November’s sales pace was revised down to 697,000 units from the previously reported 719,000 units. Sales last month were concentrated in the $200,000-$749,000 price range. New homes priced below $200,000, the most sought after, accounted for only 10% of sales. Expectations were for new home sales to increase by 1.5% in December. Sales jumped 23.0% from a year ago. For all of 2019, new home sales increased 10.3% to 681,000 units, the highest since 2007.