Gold Price Prediction – Prices Continue to Face Headwinds

Gold prices continued to trade under pressure as the dollar moved higher against the Euro. The worse than expected German ZEW survey for August weighed on the European currency as the yield differential moved in favor of the greenback. Those who were surveyed in the German ZEW saw the future expectation of business activity declining. During the balance of the week, traders will need to absorb a deluge of inflation data released in the United States, including consumer and producer prices as well as import prices.

Technical analysis

Gold prices continued to ease on Tuesday following Monday’s flash crash. Target support is seen near the March lows at 1,677. Resistance is seen near former support at the June lows at 1,750. Short-term momentum has turned negative as the fast stochastic generated crossover sell signal.  Medium-term momentum has turned negative as the MACD (moving average convergence divergence) 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 9-day moving average of the MACD line). The MACD histogram is printing in negative territory with a downward sloping trajectory which points to lower prices.

German ZEW Disappoints

The August German ZEW survey was weaker than expected, which put downward pressure on the Euro.  The expectations component fell to 40.4 from 63.3. This sub comment shows that surveyed individuals are not bullish on the future outlook. The assessment of the current situation edged up to 29.3 from 21.9.  It missed estimates for 31.0.