Gold Price Prediction – Prices Consolidate and Form Doji Day

Gold prices consolidated on Wednesday after breaking out on Tuesday but still put in a fresh 7-year high. The doji day where the open and the close were the same levels is a sign of indecision. Riskier assets were sold-off putting downward pressure on stocks which weighed on US yields. The US dollar rebounded generating headwinds for gold prices.

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Technical analysis

Gold prices formed a doji day which is an o9en and close near the same level a sign of indecision. Support on the yellow metal is seen near the 10-day moving average at 1,739. Target resistance on the yellow metal is the August 2012 highs at $1,791. Short term momentum has eased as the fast stochastic is poised to generate a crossover sell signal. The current reading on the fast stochastic is 92, above the overbought trigger level of 80 which could foreshadow a correction. Medium-term 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).

Riskier assets sold off on Wednesday following news that the US is considering imposing new tariffs against the EU. The proposed tariffs are for approximately 3-billion in exports from France, Germany, Spain, and the UK.  It is related to the ongoing US-EU fight over aircraft subsidies.  The WTO in the past has allowed the US to retaliate against a large illegal subsidy to European aircraft company Airbus.