Gold Price Prediction – Prices Consolidate After Friday’s Breakout

Gold prices moved sideways on Monday after breaking out above trend line resistance on Friday. The softening of the US dollar provided the backdrop to a rally in Gold. The FOMC is scheduled to meet this week and will announce their monetary policy decision Wednesday. They are widely expected to keep rates unchanged. With the Fed on the sideline, the dollar has eased against the Euro paving the way for higher gold prices.

Technical Analysis

Gold prices consolidated its gains from Friday by moving sideways on Monday. Resistance on the yellow metal is seen near the June 2018 highs at 1,310. Support is seen near the 20-day moving average at 1,287. Additional support is seen near the 50-day moving average at 1,257. Short term momentum has turned positive as the fast-stochastic surges higher after recently generating a short term buy signal. The MACD (moving average convergence divergence) index is poised 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 also poised to generate a crossover buy signal. The will reflect accelerating positive momentum. There is also news abound the markets that with the decline in bitcoin prices traders are piling into gold.

The ECB Changed its Risk Assessment German Money Supply is Strong

The ECB kept rates unchanged when it met last week but Draghi changed the central banks risk assessment to the downside without receiving new staff forecasts. The mention of a TLTRO means there could be consensus at the central bank for new long-term loans which will add to the accommodative stance on rates. German money supply data suggests stronger than anticipated inflation numbers despite an economy that might be contracting.  Money supply, M3 growth, accelerated to 4.1% from 3.1%, while lending to households and non-financial business accelerated.