Gold Price Prediction – Prices Decline as Riskier Assets Gain Traction

Gold prices moved lower on Monday as riskier assets continued to gain traction and the fear of geopolitical events surrounding US-Chinese trade issues subsided. The positive sentiment in US riskier assets helped buoy US yields which weighed on the value of the yellow metal. The dollar was nearly unchanged despite rising US yields as German yields continued to back up ahead of the November 1, turnover to a new ECB leader.  The EU appears to have granted the UK an additional three months to come back to the Brexit table.

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Technical Analysis

Gold prices moved lower but remain rangebound and are headed toward support near the 10-day moving average at 1,491. Additional support is seen near the 100-day moving average at 1,464. Resistance is seen near a downward sloping trend line that comes in near trend line that comes in near 1,506. The next level of target resistance is seen near the October highs at 1,519.

Short term momentum has turned positive but recently has been whipsawing. The fast stochastic is printing in the middle of the neutral range. 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). The MACD histogram is printing in the black with a rising trajectory that points to higher prices.

Brexit Remain in the Headlines

The EU appears to be willing to grant the UK a 3-month extension to return to the Brexit table. This comes on the heel of UK Prime Minister Boris Johnson’s request. France wanted a shorter time frame wishing to grant a one-month extension only.  The EU is expected to inform the UK about its decision on Tuesday.   The EC had previously rejected the re-opening the agreement. China is experiencing a protracted downturn. Chinese profits in the Industrial sectors dropped by the largest amount in 4-years. This is mainly driven by US tariffs. Profits at China’s industrial sectored declined by slightly more than 5%.  It was the biggest decline since August 2015.